The base metals put in a relief rally yesterday on the back of an agreement between Greece and its creditors, with average gains of 1.9 percent, the PGMs were also firmer, while bullion prices were not surprisingly lower.
This morning the base metals prices have slipped, they are down an average of 0.6 percent, with copper off the least with a 0.2 percent drop to $5,574, while nickel and tin are down 1.0 and 1.3 percent respectively, although they were up over three percent yesterday, as was lead. Volume has been light with 3,065 lots traded.
Precious metals remain mixed, with platinum up 0.3 percent at $1,032.40, while palladium and silver are down 0.3 percent and the gold price is off 0.1 percent at $1,156.10.
In Shanghai, the base metals are up an average of 1.6 percent as Shanghai prices followed yesterday’s gains on the LME, with nickel and lead up 2.9 and 2.6 percent respectively, while zinc is up 1.8 percent, tin is up 1.3 percent, aluminium is up 0.2 percent and copper is up 0.6 percent at Rmb 40,410. Spot copper in Changjiang is also up 0.6 percent, the backwardation with the September futures is at an equivalent of $140 per tonne and the LME/Shanghai copper arb ratio is 7.40.
Bullion prices in Shanghai are weaker with silver down 1.3 percent and gold is off 0.6 percent.
Equities – The Greek deal led to a 1.8 percent rally in the Euro Stoxx 50 and the Dow closed up 1.2 percent, but Asia is mixed with China’s CSI 300 down 1.7 percent, the Hang Seng is down 0.9 percent, the Kospi down 0.1 percent but the Nikkei is up 1.3 percent, helped by a weaker yen.
Currencies – the dollar index (97.03) is firmer and the euro (1.0968) is weaker on the Greek deal, which suggests the market in viewing this progress as freeing up the Fed to raise rates if domestic conditions warrant it. Sterling is consolidating at 1.5460, the yen is weaker at 123.37 and the aussie is last at 0.7427, so it has not got much lift on the back of the rebound in metals. The rouble is weaker at 56.53, as is the yuan at 6.2084.
The economic agenda is busy today with German CPI that dropped 0.1 percent, there is a host of UK inflation data out, German and EU ZEW economic sentiment, EU industrial production and US data includes retail sales, import prices and business inventories. Speakers included Bank of England Governor Mark Carney and UK Monetary Policy Committee member David Miles – see table below for more details.
Gold and silver prices are weaker on the back of the Greek deal and the stronger dollar is no doubt prompting that, but prices have not sold off aggressively, which is something. The PGMs did get some lift yesterday as the outlook for industrial demand looked brighter, but at best prices seem to be consolidating. Overall it is difficult to get too excited about the precious metals as they continue to fail to get much lift. That said, we are watching the growing fund gross short positions, which may well be weighing on prices now, but at some time could prompt short-covering.
The base metals have rebounded in recent days on the combination of a halt in the slide in Chinese equities and on the Greek deal, but prices are now consolidating. Given how oversold prices had become, we would not be surprised to see the rallies go further and extra fuel could be added if the rallies prompt short-covering. It maybe that the markets now need to see the Greek deal ratified by the individual parliaments. Overall we would expect dips to be well supported.
| Overnight Performance | ||||
| BST | 06:51 | +/- | +/- % | Lots |
| Cu | 5574 | -9 | -0.2% | 1335 |
| Al | 1704 | -4.5 | -0.3% | 296 |
| Ni | 11460 | -115 | -1.0% | 723 |
| Zn | 2046 | -8 | -0.4% | 542 |
| Pb | 1837 | -6 | -0.3% | 127 |
| Sn | 14525 | -185 | -1.3% | 42 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.6% | 3,065 | ||
| Gold | 1156.1 | -0.9 | -0.1% | |
| Silver | 15.41 | -0.04 | -0.3% | |
| Platinum | 1032.4 | 3.4 | 0.3% | |
| Palladium | 653.8 | -2.2 | -0.3% | |
| Average PM | -0.1% | |||
| SHFE Prices 07:05 BST | Change | % Change | |
| Cu | 40410 | 230 | 0.6% |
| AL | 12430 | 30 | 0.2% |
| Zn | 15510 | 280 | 1.8% |
| Pb | 13200 | 335 | 2.6% |
| Ni | 84970 | 2380 | 2.9% |
| Sn | 108980 | 1370 | 1.3% |
| Average change (base metals) | 236.5 | 1.6% | |
| Rebar | 2075 | 5 | 0.2% |
| Au | 233.65 | -1.5 | -0.6% |
| Ag | 3348 | -45 | -1.3% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:01am | UK | BRC Retail Sales Monitor y/y | 1.8% | 0.0% | |
| 7:00am | Germany | German Final CPI m/m | -0.1% | -0.1% | -0.1% |
| 9:30am | UK | CPI y/y | 0.0% | 0.1% | |
| 9:30am | UK | PPI Input m/m | -0.7% | -0.9% | |
| 9:30am | UK | RPI y/y | 1.0% | 1.0% | |
| 9:30am | UK | Core CPI y/y | 0.9% | 0.9% | |
| 9:30am | UK | HPI y/y | 5.9% | 5.5% | |
| 9:30am | UK | PPI Output m/m | 0.1% | 0.1% | |
| 10:00am | Germany | German ZEW Economic Sentiment | 30.6 | 31.5 | |
| 10:00am | EU | ZEW Economic Sentiment | 51.1 | 53.7 | |
| 10:00am | EU | Industrial Production m/m | 0.2% | 0.1% | |
| 10:15am | UK | Inflation Report Hearings | |||
| 11:00am | US | NFIB Small Business Index | 98.6 | 98.3 | |
| All Day | EU | ECOFIN Meetings | |||
| 12:45pm | UK | BOE Gov Carney Speaks | |||
| 1:30pm | US | Core Retail Sales m/m | 0.7% | 1.0% | |
| 1:30pm | US | Retail Sales m/m | 0.2% | 1.2% | |
| 1:30pm | US | Import Prices m/m | 0.1% | 1.3% | |
| 3:00pm | US | Business Inventories m/m | 0.3% | 0.4% | |
| 6:00pm | UK | MPC Member Miles Speaks | |||
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