The base metals started on a front footing yesterday morning and at the day’s higher prices were up an average of 1.4 percent – mainly on the back of the weaker dollar following dovish comments from the FOMC. We thought the rallies looked half-hearted though and may be short-lived, which for the most part turned out to be the case. The metals closed up by an average of 0.4 percent with quite a mixed performance, with nickel and zinc lower by around 0.8 percent, copper was unchanged at $5,748, as was lead, aluminium was up 0.2 percent and tin closed up an impressive 3.6 percent at $15,285.
Precious metals liked the weaker dollar and reacted accordingly – they were up 1.7 percent at the day’s highs before closing with average gains of 0.4 percent, led by bullion with gold up 1.4 percent at $1,201.20 and silver up 0.7 percent at $16.18, while the platinum was unchanged and palladium was down 0.4 percent.
This morning the base metals are mixed with tin giving back some of yesterday’s gains, it is off 0.6 percent, nickel is up 0.3 percent, while the rest are ranged between plus and minus 0.1 percent, with copper at $5,755.50. Volume remains light with 2,647 lots traded, the bulk being copper that has traded a range between $5,773.50 and $5,738.50.
Precious metals are also mixed this morning as the markets consolidate with platinum up 0.5 percent at $1,083.90, silver is off 0.3 percent and gold and palladium are off 0.1 percent, with gold at $1,199.70.
In Shanghai, aluminium, lead and tin are firmer by 0.4, 0.5 and 1.5 percent respectively, while zinc, nickel and copper are off 1.1, 0.4 and 0.1 percent respectively with copper at Rmb 41,880 – so quite a mixed picture. In Changjiang, spot copper is off 0.4 percent at Rmb 42,200-42,400, the backwardation with the futures is at a wider equivalent of $84 per tonne and the LME/Shanghai copper arb ratio is also wider at 1 to 7.27, but the arb window is still shut.
Precious metals in Shanghai are firmer with gold up 1.3 percent and silver up 0.3 percent.
Equities were stronger yesterday with the Euro Stoxx 50 up 0.6 percent and the Dow was up one percent, which meant the markets managed to put the more pressing Greece issue aside, while the market focused on the likelihood that the Fed would not be aggressive in its monetary tightening when the time comes – good US initial jobless claims data also buoyed sentiment. Asia is mixed this morning with the Nikkei and Hang Seng up one percent, China’s CSI 300 is down 2.6 percent and the Kospi is up 0.4 percent.
Currencies – the dollar index is recouping some of its recent weakness, yesterday it reached a low of 93.56, it is last at 94.20, the euro is pulling back from yesterday’s peak of 1.1436, last at 1.1345, cable is strong at 1.5867, the yen is firmer at 123.14, as is the rouble at 53.58, the aussie is at 0.7764 and the yuan is at 6.2075. Given the uncertainty over Greece it is a wonder the euro is as strong as it is, we expect trading to become more volatile as deadlines approach.
The economic data is fairly light but the agenda seems to have focused on emergency meetings with the ECB calling one today and the EU are holding one on Monday. Japan’s all industries activity data climbed just 0.1 percent, German PPI was flat, later we get the EU current account, UK public sector borrowing requirement, there is a Ecofin meeting and FOMC member John Williams is speaking – see table below for more details.
The base metals tried to rebound yesterday but there was little follow through buying interest and prices are now consolidating around recent support – so for now the recent sell-offs are just pausing, although zinc has extended lower this morning. All in all, the markets look vulnerable. The exception is tin that rebounded strongly yesterday – given tin stocks continue to fall we are not surprised by that.
Precious metals are split into two camps, the PGMs are weak and vulnerable, especially palladium, gold has rebounded strongly, but is struggling to hold on to the $1,200 level, while silver is consolidating above support. Given heightened tension over Greece we would expect gold to pick-up more safe-haven buying.
| Overnight Performance | ||||
| BST | 06:28 | +/- | +/- % | Lots |
| Cu | 5755.5 | 7.5 | 0.1% | 1686 |
| Al | 1703.5 | -1 | -0.1% | 330 |
| Ni | 12755 | 40 | 0.3% | 127 |
| Zn | 2066.5 | -1.5 | -0.1% | 241 |
| Pb | 1807.5 | -0.5 | 0.0% | 231 |
| Sn | 15200 | -85 | -0.6% | 32 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 0.0% | 2,647 | ||
| Gold | 1199.7 | -1.5 | -0.1% | |
| Silver | 16.13 | -0.05 | -0.3% | |
| Platinum | 1083.9 | 5.9 | 0.5% | |
| Palladium | 716.6 | -0.4 | -0.1% | |
| Average PM | 0.0% | |||
| SHFE Prices 06:41 BST | Change | % Change | |
| Cu | 41880 | -40 | -0.1% |
| AL | 12695 | 45 | 0.4% |
| Zn | 15705 | -180 | -1.1% |
| Pb | 12960 | 60 | 0.5% |
| Ni | 95860 | -400 | -0.4% |
| Sn | 114000 | 1710 | 1.5% |
| Average change (base metals) | 0.1% | ||
| Rebar | 2253 | 15 | 0.7% |
| Au | 242.4 | 3.1 | 1.3% |
| Ag | 3576 | 11 | 0.3% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 4:04am | JPY | Monetary Policy Statement | |||
| 5:30am | JPY | All Industries Activity m/m | 0.1% | 0.3% | -1.4% |
| 7:00am | EUR | German PPI m/m | 0.2% | 0.1% | |
| Tentative | JPY | BOJ Press Conference | |||
| 9:00am | EUR | Current Account | 18.1B | 18.6B | |
| 9:30am | GBP | Public Sector Net Borrowing | 10.1B | 6.0B | |
| All Day | EUR | ECOFIN Meetings | |||
| 4:40pm | USD | FOMC Member Williams Speaks | |||
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