MTECHTIPS Copper gets a punch in the belly as China PMI shrinks

MTECHTIPS:-Copper gets a punch in the belly as China PMI shrinks

Copper futures have received a punch in the belly as China Purchasing Managers’ Index (PMI) for May has retreated into territory of contraction with HSBC Flash China Manufacturing PMI providing a reading of 49.6 compared to 50.4 in April. The May readings are at a seven-month low. Flash China Manufacturing Output Index meanwhile prevailed at 51.0 compared to 51.1 in April, a three-month low.A PMI reading of below 50 is indicative of contraction in the economy.Copper futures on the Comex for delivery o July 13 was seen trading at $3.316 a pound, a loss of $0.052 or 1.55% as of 08.47 AM IST.Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said, “the cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds. A sequential slowdown is likely in the middle of 2Q, casting downside risk to China’s fragile growth recovery.“Moreover, the further signs of labour market slackness call for more policy support. Beijing still has fiscal ammunition to do so,” he added.