Copper Could Push ASX 200 Higher 

• Copper continues to rally, approaching $5.00 

• BHP a laggard 

• Materials could be major driver of ASX 200 

• Will China help the ASX 200? 

Copper markets have been on fire as of late, and this has a direct correlation to how the ASX 200 could perform. After all, one of the biggest exports out of Australia is of course hard material such as copper, and some of the biggest companies listed on the ASX will be directly influenced by this price action. 

As demand for copper continues to increase, and of course inflation continues to rage around the world, the copper market has been particularly strong over the last several weeks, culminating in a huge push higher toward the $5.00 level during the trading session on Tuesday. This flies in the face of some recent short-term weaknesses that we have seen in the Materials Sector on the exchange. Companies such as BHP Group Limited (BHP), Fortescue Ltd (FMG), and RIO Tinto (RIO) have all seen either losses or relative weakness over the last month. 

That being said, all of these companies could be major beneficiaries of the copper markets, and some external noise has been seen in BHP, as they recently had a failed attempt to purchase a competitor. BHP is by far the weakest of the 3 major materials companies listed on the ASX 200, with a -1.60% performance over the last year. However, this last week has seen a gain of 94 basis points. Looking at Rio Tinto, there has been a gain of 17.58% over the last year, while Fortescue Ltd has gained 26.64% in that same timeframe. 

Copper Breaks Out Again 

Copper has spent the last couple of sessions breaking a major resistance barrier near the $4.62 level, and during the early hours on Tuesday in US trading has seen the market reach the $5.00 level. The initial reaction was a little bit of a pullback, more likely than not due to systematic traders or perhaps even just the psychology of the big, round, psychologically significant level. 

That being said, if copper continues to find buyers on dips, it is possible that equities traders will take advantage of miners in Australia, as a way to play not only copper, but other base metals such as iron, aluminum, and many of the other less glamorous markets. This will be especially turbocharged if the Chinese start to become that buyers again, and it is worth noting that China seems to have seen better economic numbers as of late, and the Chinese indices are all performing much better than they were just a few months ago. 

ASX 200 Technical Analysis 

The technical analysis for the ASX 200 suggest that the 20-Day EMA and the 50-Day EMA underneath could offer a certain amount of support, as it has most certainly done so for the last couple of days. It is also worth noting that the 7700 level is an area that has seen both support and resistance as of late. On the upside, the 7900 level continues to be a bit of resistance, but breaking above there could send the ASX 200 much higher. 

As copper prices continue to rally, that could continue to put upward pressure on the major miners in Australia, and thereby the outsized influence of that sector could drag the index right along with it. Now that traders may not be as focused on BHP and its failure to pick up Anglo-American through acquisition, they may start to focus more on raw materials and demand, allowing BHP to step in and do its part along with Fortescue, RIO, and so many others that traders tend to gravitate toward. 

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