The rebounds in the base metals ran out of steam on Friday after initially rising an average of 0.7 percent on Friday morning, selling emerged pushing prices down an average of 1.4 percent with zinc and lead dropping around 2.1 percent, while tin was off the least with a 0.6 percent decline and copper fell 1.5 percent to $6,018. The revision of first quarter US GDP growth to -0.7 percent from 0.2 percent did nothing to help sentiment, even though an even larger downward revision whad been expected. Negative growth is still negative growth and not good for metal demand.
Precious metals ended the day down an average of 0.4 percent on Friday with the revised negative GDP data sapping broad market sentiment even though the poor data means it is likely that the Fed will be in no hurry to raise rates. Gold closed unchanged at $1,189.90, while the PGMs closed down around 0.8 percent.
This morning with no scares from China’s PMI data and some bullish Japanese capital spending data, the base metals have started on a firmer footing with the complex up an average of 0.3 percent with nickel and aluminium up 0.5 percent and copper up 0.4 percent at $6,041. Volume remains light with 3,880 lots traded, with nickel once again trading more than aluminium and zinc – see table below for more details.
The PGMs have recovered some of Friday’s lost ground, they are up an average of 0.5 percent this morning, while gold and silver are little changed with gold at $1,191.6.
In Shanghai, the base metals are down across the board with average losses of 0.8 percent – this is not particularly encouraging given the PMI data was as expected. Nickel leads on the downside with a 1.7 percent fall to Rmb 98,200, copper and zinc are down around one percent with copper at Rmb 43,700. Spot copper in Changjiang, is down 1.1 percent at Rmb 43,900-44,000, the backwardation with the August futures is around an equivalent of $48 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.24.
Precious metals in Shanghai are little changed with gold up 0.2 percent and silver up 0.1 percent.
Equities – on Friday the poor US GDP data and concerns over Greece were weighing on sentiment that saw the Euro Stoxx 50 and Dow close down 2.2 and 0.6 percent, respectively. This morning in Asia, the markets are mixed but China is upbeat with the CSI 300 up 3.3 percent, the Hang Seng is up 0.8 percent, the Nikkei is little changed and the Kospi is off 0.5 percent. Reports that China is considering extending its local government bond swap programme, which would help cash-strapped local governments continue with infrastructure projects, has boosted sentiment and the flattening out of the PMI data suggests the slide in growth may have halted, although it may be too early to say that with any confidence.
Currencies – the dollar index is at 97.08 so is holding up well after the rebound from May’s low of 93.13, the euro is mid-range at 1.0955, sterling is trending lower, last at 1.5293, as are the yen at 124.14, the aussie at 0.7650, the rouble is at 52.43 and the yuan is firmer at 6.1980.
The economic agenda is busy today with final PMI data out across all regions. China’s and Japan’s data were stable, Japan’s capital spending climbed 7.3 percent. Later, in addition to more PMI data, there is German CPI, US personal income, spending and prices, construction spending and FOMC Stanley Fischer is speaking – see table below for more details.
The base metals generally remain on a back footing – the attempts to rally on Wednesday/Thursday last week stalled on Friday, so prices are once again vulnerable. Whether developments in China, with the PMI stabilising and reports of potentially more support for local governments, are enough to underpin prices remains to be seen. For now, we feel the markets are well supplied so we would not be surprised to see prices trade sideways-to-lower, although the likes of aluminium and nickel that have already sold off heavily may manage to trade sideways as former bases provide support.
The precious metals have been under pressure again, especially the PGMs, while gold and silver have pulled back to find support above recent support levels. Given the likelihood that the Fed stays on hold for longer and the continuing uncertainty over Greece, we would expect bullion prices to remain well supported, but they lack upward drive as investors still seem focused on equities.
| Overnight Performance | ||||
| BST | 06:17 | +/- | +/- % | Lots |
| Cu | 6041 | 23 | 0.4% | 2054 |
| Al | 1750 | 8.5 | 0.5% | 578 |
| Ni | 12660 | 60 | 0.5% | 727 |
| Zn | 2189 | 4.5 | 0.2% | 461 |
| Pb | 1957 | 5 | 0.3% | 60 |
| Sn | 15540 | 0 | 0.0% | |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.3% | 3,880 | ||
| Gold | 1191.6 | 1.7 | 0.1% | |
| Silver | 16.71 | -0.01 | -0.1% | |
| Platinum | 1112.9 | 7.9 | 0.7% | |
| Palladium | 776.2 | 2.2 | 0.3% | |
| Average PM | 0.3% | |||
| SHFE Prices 06:37 BST | Change | % Change | |
| Cu | 43700 | -460 | -1.0% |
| AL | 13180 | -25 | -0.2% |
| Zn | 16640 | -180 | -1.1% |
| Pb | 13280 | -100 | -0.7% |
| Ni | 98200 | -1660 | -1.7% |
| Sn | 116100 | -220 | -0.2% |
| Average change (base metals) | -0.8% | ||
| Rebar | 2358 | 9 | 0.4% |
| Au | 241.2 | 0.5 | 0.2% |
| Ag | 3652 | 4 | 0.1% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | Capital Spending q/y | 7.3% | -0.1% | 2.8% |
| 1:58am | China | Manufacturing PMI | 50.2 | 50.2 | 50.1 |
| 2:00am | China | Non-Manufacturing PMI | 53.2 | 53.4 | |
| 2:35am | Japan | Final Manufacturing PMI | 50.9 | 50.9 | 50.9 |
| 2:45am | China | HSBC Final Manufacturing PMI | 49.2 | 49.2 | 49.1 |
| All Day | Germany | German Prelim CPI m/m | 0.0% | 0.0% | |
| 8:15am | Spain | Spanish Manufacturing PMI | 54.4 | 54.2 | |
| 8:45am | Italy | Italian Manufacturing PMI | 53.1 | 53.8 | |
| 8:50am | France | French Final Manufacturing PMI | 49.3 | 49.3 | |
| 8:55am | Germany | German Final Manufacturing PMI | 51.4 | 51.4 | |
| 9:00am | EU | Final Manufacturing PMI | 52.3 | 52.3 | |
| 9:30am | UK | Manufacturing PMI | 52.7 | 51.9 | |
| 1:30pm | US | Core PCE Price Index m/m | 0.2% | 0.1% | |
| 1:30pm | US | Personal Spending m/m | 0.2% | 0.4% | |
| 1:30pm | US | Personal Income m/m | 0.3% | 0.0% | |
| 2:30pm | US | FOMC Member Fischer Speaks | |||
| 2:45pm | US | Final Manufacturing PMI | 54.2 | 53.8 | |
| 3:00pm | US | ISM Manufacturing PMI | 51.9 | 51.5 | |
| 3:00pm | US | Construction Spending m/m | 0.7% | -0.6% | |
| 3:00pm | US | ISM Manufacturing Prices | 43 | 40.5 | |
The post Metals find support for now, but remain vulnerable appeared first on The Bullion Desk.
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