Investor pessimism eases copper prices will have limited room to fall

U.
S.
manufacturing and employment data were weak
.
First, the contraction in the US manufacturing sector intensified, with the ISM manufacturing index at 47.
8 in September, the lowest since
June 2009.
Among them, the employment index, output index and inventory index are all lower than the previous value, indicating that the confidence of US manufacturing companies has declined, and concerns about tariffs have increased
.
Second, U.
S.
employment growth slowed, with ADP adding 135,000 jobs in September, weaker-than-expected and the slowest pace since June
.
Third, the eurozone job market is doing well, but manufacturing continues to shrink.

The eurozone unemployment rate came in at 7.
4 percent in August, lower than expected and the lowest in more than a decade, but the final Eurozone manufacturing PMI came in at 45.
7 in September, the lowest since
October 2012.

At the same time, the trade situation between Europe and the United States is tense
.
The World Trade Organization ruled that the United States has the right to impose tariffs and other measures
on about $7.
5 billion of EU goods and services exported to the United States every year.
The United States announced that it will officially impose tariffs
on some EU goods from October 18.
European Commission President Jean-Claude Juncker said the EU would counter if the United States imposed tariffs on EU goods
.
In addition, a hard Brexit has disrupted the market
.
British Prime Minister Boris Johnson said he had submitted a final Brexit proposal
to the European Union.
If the EU does not accept the new option, the UK will leave the EU
without a deal on October 31.
Affected by the above multiple bearishness, investor worries have risen, weighing on the price of risky assets, and copper prices have continued to fall
.

Deepening U.
S.
manufacturing contractions and slowing job growth have heightened concerns about the U.
S.
economy and given the Fed a reason to continue cutting interest rates, which investors expect in October
.
After the release of the above data, CME "Fed Watch" data showed that the probability of a 25 basis point rate cut by the Fed in October rose above 90%, and the dollar index continued to adjust
downward after climbing.
At the same time, the economic outlook for the eurozone is not optimistic, and the ECB is increasingly calling for another interest rate cut
.
Weaker-than-expected manufacturing PMIs in major eurozone countries and tariffs imposed by the United States on imports of EU goods could weigh on the European economy
.
ECB President Mario Draghi said the ECB is likely to remain accommodative.

Although the ECB is expected to cut interest rates in October, the date of the next rate cut has been brought forward to March next year, and fiscal stimulus will be a complementary means of monetary policy, and the eurozone may implement policies
such as public net investment and tax cuts.
In terms of Brexit, the British government document clearly states that if it cannot reach an agreement with the EU in October, it will seek to extend Brexit, which eases the impact
of previous hard Brexit rhetoric on the market.

In addition, China's manufacturing PMI has improved, and counter-cyclical adjustment has continued to exert force
.
China's official manufacturing PMI in September was 49.
8, higher than expected and the previous reading, indicating that the manufacturing boom continued to improve
.
Given that the official manufacturing PMI remains below the boom-bust line, China's countercyclical adjustment is expected to continue to ensure that the economy is operating in a reasonable range
.

To sum up, multiple bearish factors suppressed the price of risk assets during the holiday period, and copper prices continued to fall
.
However, the downward pressure on the economy will provide the possibility of easing monetary policy, coupled with the continuous improvement of China's manufacturing industry, easing investor pessimism, copper prices will have limited room to fall
.
We believe that after the holiday, London copper will stabilize or even recover slightly, and the downward gap of Shanghai copper after the opening may not be large, and the overall operation
is in the oscillation range.