All quiet with China closed, waiting for PMI data

The base metals put in a strong performance on Friday, especially lead that closed up 3.1 percent, while copper was up 1.1 percent at $4,877.50, nickel was up one percent and zinc was up 0.9 percent, while aluminium and tin were little changed. In precious metals, gold started to pulled back having had a brief try higher on the back of concerns over Deutsche Bank, these concerns eased on Friday. Platinum remained weak, while palladium remained high at $718.

The morning with China closed all week, volume on the LME has been light with just 805 lots traded as of 06:30 BST, compared with an average of 5,305 lots at this time of day last week. Nickel is up 0.5 percent at $10,565, zinc, lead and copper are off around 0.3 percent, with copper at $4,866 and tin and aluminium are little changed. Precious metals are off an average of 0.2 percent, with palladium down 0.5 percent, silver is off 0.3 percent at $19.09, platinum is off 0.1 percent and gold prices are up 0.2 percent at $1,314.70.

Equities were firmer on Friday as the worries about on Deutsche Bank subsided as it looked like the fine they would be changed was cut, the Euro Stoxx 50 closed up 0.3 percent (the Dax was up one percent) but the Dow closed up 0.9 percent. This morning, the Nikkei is up 0.9 percent, the Hang Seng is up 1.2 percent and the ASX 200 is up 0.8 percent.

In FX, the dollar index is edging higher, last at 95.56, the euro is at 1.1230, the yen is weaker at 101.49, as is sterling at 1.2937 and the aussie is flat at 0.7650. Emerging market currencies look largely rangebound with the rouble testing resistance, last at 62.86. Brent crude prices are just below the $50 level, at $49.94.

The economic agenda is busy – data out over the weekend showed China’s official manufacturing PMI came in unchanged at 50.4, but non-manufacturing PMI edged higher to 53.7 from 53.50. This morning, Japan’s manufacturing PMI also edged higher at 50.4 from 50.3, the Tankan manufacturing was unchanged at 6 and non-manufacturing edged lower to 18, from 19. Later we get manufacturing PMI out across Europe and the US, with US construction spending and total vehicle sales data out as well – see table below for more details.

The base metals are generally well placed to continue higher and the trend in recent weeks has been to the upside with tin, lead and zinc setting fresh highs for the year last week, while the other metals are near recent highs and are so far holding on to gains. Today’s PMI data is likely to provide insight into how underlying economies are doing. We remain mildly bullish.

The precious metals are looking quite diverse with gold prices struggling to rise and when they do they struggle to hold on to any gains, platinum is following gold’s lead, as is silver, but it is finding support at higher levels, while palladium has been acting more like the base metals with challenges to overhead resistance levels. It is surprising platinum and palladium are so polarised given wage negotiations in South Africa and the fact any supply disruption would hit a greater percentage of the world’s platinum mining than palladium. As such, we feel platinum prices may have some catching up to do unless wage negotiations show progress.

Overnight Performance
BST	06:32	+/-	+/- %	Lots
Cu	4866	-11.5	-0.2%	345
Al	1672.5	-0.5	0.0%	180
Ni	10565	50	0.5%	70
Zn	2369	-8	-0.3%	72
Pb	2126	-4	-0.2%	137
Sn	20045	-5	0.0%	1
	Average		-0.1%	805
Gold	1314.67	2.92	0.2%
Silver	19.091	-0.059	-0.3%
Platinum	1019.7	-1.3	-0.1%
Palladium	714.1	-3.9	-0.5%
	Average PM		-0.2%

 

BST	Country	Data	Actual	Expected	Previous
12:50am	Japan	Tankan Manufacturing Index	6	7	6
12:50am	Japan	Tankan Non-Manufacturing Index	18	18	19
All Day	China	Bank Holiday
1:30am	Japan	Final Manufacturing PMI	50.4	50.3	50.3
All Day	Germany	German Bank Holiday
8:15am	Spain	Spanish Manufacturing PMI		51.6	51
8:45am	Italy	Italian Manufacturing PMI		50.2	49.8
8:50am	France	French Final Manufacturing PMI		49.5	49.5
8:55am	Germany	German Final Manufacturing PMI		54.3	54.3
9:00am	EU	Final Manufacturing PMI		52.6	52.6
9:30am	UK	Manufacturing PMI		52.1	53.3
9:30am	UK	FPC Meeting Minutes
2:45pm	US	Final Manufacturing PMI		51.4	51.4
3:00pm	US	ISM Manufacturing PMI		50.4	49.4
3:00pm	US	Construction Spending m/m		0.3%	0.0%
3:00pm	US	ISM Manufacturing Prices		53.5	53
All Day	US	Total Vehicle Sales		17.4M	17.0M

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