Copper price rebounds almost 3% to 4305 in European morning as WHO clarified the number of deaths due to swine flu and recoveries in stock markets. However, weak copper-specific fundamentals should limit upside on copper.
Earlier today, the World Health Organization (WHO) said in its website that the number of people died because of swine flu was 7 around the world, instead of 159 as reported in news. Mexico has reported 26 confirmed cases of infection with 7 deaths while the US Government has reported 64 confirmed infections with no death. Other countries with confirmed cases include Canada, New Zealand, the UK, Israel and Spain. Market participants are more relieved as the situation appeared to have been under control.
Stock markets advance. In Asia, the MSCI Asia Pacific Index added 2.6% while Hong Kong's Hang Seng Index gained 2.8% from the lowest level in 3 weeks. South Korea's KOSPI Index also added 2.9% after a report showed the nation's current account surplus widened to $6.65B on surge in exports in March. I European morning, UK's FTSE 100 Index rises 1.3% as led by banking and financial shares. Germany's DAX and France's CAC 40 Index also soar about 1%.
Apart from copper, oil and gold price also edge higher. WTI crude oil price hovers around 50 although the US Energy Department will likely report another week of inventory gain. Gold price also recovers slightly, though still pressured below 900, as the dollar retreats.
USD and Japanese yen pull back as risk aversion reduces and the Eurozone reported better-than-expected confidence data. In April, economic confidence improved to 67.2, the first increase in 2 years, from 64.7 in March while consumer confidence rose to -31 in April, compared with a reading of -34 a month ago. The dollar index retreats -0.7% to 84.56 whereas the dollar falls to 1.327 against the euro.
After releasing the white paper about the stress test last Friday, the latest news showed that at least 6 out of the 19 banks examined will need additional capital. There are several ways for banks to add capital which includes raising money from private funds and getting cash from taxes. However, most of it would come from converting preferred shares held by the Government to comment shares.
The detailed report will be released next week. The final result will likely increase the overhang in the financial markets which is negative for longer term prospect of stock market. Moreover, increase in government injection would raise worries on dollar's depreciation. This would be positive for gold.