Chicago 05/01/2016 - Bullish investors returned to the copper market on Tuesday as the Chinese equities steadied after a shaky beginning to the new year.
Copper for March delivery on the Comex division of the New York Mercantile exchange increased 1.6 cents to close at $2.0955 per pound. Trade ranged from $2.0735 to $2.1115.
Earlier today, sources told Fastmarkets that China's State Reserve Bureau (SRB) is looking to purchase 150,000 tonnes of copper through a tender later this week.
The move is in response to tumbling prices, which were exacerbated yesterday after China's two main equity markets – Shenzhen Composite and Shanghai Composite – tumbled 8.2 percent and 6.86 percent respectively.
Even though a further downturn was avoided today, the underlying fundamentals remain poor for the base metals complex.
China'a December's Caixin manufacturing PMI came in at 48.2, below forecast of 48.9 and the 10th straight month of contraction - the soft data was a contributing factor for the stock market selloff.
"Chinese equity markets were under pressure again during the overnight session, but alleged intervention by government owned brokerages and funds halted the declines," Sucden Financial said.
In the interim, markets are expected to be relatively quiet as Chinese investors prepare for their own holiday season.
"The markets will drift until after the Chinese New Year where traders will be hoping for a clear signal and new buying," Malcolm Freeman, director at Kingdom Futures, said.
"The outlook in the short term would still suggest the prices moving lower and re-testing the lows set in November," Freeman added.
Turning to US equities, the Dow Jones industrial average and S&P were up 0.1 percent and 0.3 percent respectively, while the dollar was trading 0.9 percent stronger at $1.0742 against the euro.
The economic agenda is light today, with US car sales scheduled for release this afternoon.
Investors will also pay attention to the US December employment report come Friday as it is expected to influence Fed policy and the probability of a March rate increase.
In other commodities, light sweet crude (WTI) oil futures were down 81 cents or 2.2 percent to $35.95 per barrel, while the most-actively traded gold contract $1,077.50 per ounce, up $2.30.
(Editing by Tom Jennemann)