A copper exchange traded note surged Tuesday and was testing its long-term resistance line after China’s strong economic data eased growth concerns.
The iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) gained 2.7% on Wednesday on over three times its average daily volume and was testing its resistance at the 200-day simple moving average as Comex copper futures rose 2.6% to $2.156 per pound. JJC was down 3.4% year-to-date.
Copper prices strengthened on an improved outlook on China, the world’s largest copper consumer, after the emerging economy revealed industrial output increased 6.3% in August year-over-year and accelerated from 6.0% growth in July, according to the National Bureau of Statistics.
[related_stories]“With better than expected Chinese data appearing, we would expect dips to be well supported and to be followed by further strength,” William Adams of Fastmarkets told Reuters.
Moreover, investment in buildings and other fixed assets outside rural households jumped to a better-than-expected 8.1% year-over-year for the first eight months of 2016 while retail sales expanded 10.6% in August from a year ago, the Wall Street Journal reports.
SEE MORE: Copper Conundrum: More Red Seen for the Red Metal
The improved data helped lift hopes that Beijing’s efforts to reverse the slide in investment growth are paying off as the stronger industrial activity last month had been somewhat driven by a recovery in investment spending, notably in the state sector.
Consequently, the data also suggested that downside risk for a third quarter GDP has diminished.
“The demand picture is relatively good for copper in terms of China and I think we’ve worked through a lot of those excess inventories,” Oxford Economics analyst Dan Smith told Reuters.
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iPath Bloomberg Copper Subindex Total Return ETN