Copper ETF Decline Signals Global Growth Jitters
April 12th 2012 at 8:39am by John Spence
An exchange traded note tracking copper futures is on a six-day losing streak, falling nearly 8% and signaling investor concerns about global growth.
Copper prices rebounded about 1% Thursday morning on hopes the European Central Bank will buy more bonds to ease the debt crisis.
Investors keep an eye on copper as an indicator for the health of the global economy, particularly China. [What Materials, Copper ETFs are Saying About the Market]
“Risk appetite has come back: comments from the ECB executive signaled that the bank could intervene with further release of credit; Chinese new loans data was significantly better than expected and car sales data showed an improvement,” said Eugen Weinberg, head of commodity research at Commerzbank, in a Reuters story Thursday.
Copper ETFs have had a decent track record lately in terms of sending timely warnings about looming trouble in U.S. stocks. [Dr. Copper: Using ETFs to Diagnose the Global Economy’s Health]
However, the most accurate forecasters are predicting copper shortages and an improving U.S. economy will push prices to the highest in a year in the next quarter, according to a separate report.
The metal will average $9,000 a ton in the third quarter, 11% more than current levels, according to the median estimate of the top five analysts in Bloomberg Rankings over the past eight quarters.
“The U.S. economy is pretty good,” said James Paulsen, chief investment strategist at Wells Capital Management, in the Bloomberg article. “Emerging markets should start to pick up. Some time by the end of the year we may look back at commodity prices in general and copper in particular and say this was a good time to buy.”
The iPath Dow Jones UBS Copper Subindex Total Return ETN (NYSEArca: JJC) is down more than 20% the past year on the Eurozone debt crisis. The ETN’s six-day string of losses has pushed it below the 50-day and 200-day moving average.
iPath Dow Jones UBS Copper Subindex Total Return ETN
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