пятница, 28 сентября 2018 г.
METALS MORNING VIEW 28/09: Some strength emerges in the metals after Thursday’s weakness
Three-month base metals prices on the London Metal Exchange were up across the board with gains averaging 0.4% on the morning of Friday September 28. But this follows a general down day on Thursday, when the complex closed down by an average of 1%.
This morning’s gains are ranged from little changed for aluminium and tin to up by 0.7% for nickel, with copper up by 0.4% at $6,205 per tonne.
Volume has been average with 5,686 lots traded as at 07:13am London time.
In the precious metals, spot gold prices were off by 0.1% at $1,182.95 per oz, while the more industrial precious metals were up between 0.2% for silver and platinum prices and 0.4% for palladium prices. Thursday’s action was polarized with gold, silver and platinum down by an average of 1.1%, while palladium bucked the trend by rising 1.5%.
In China, the base metals prices were divergent with the November zinc, November lead and January tin contracts up by an average of 0.9%, while the November contracts for copper, aluminium and nickel were down by 0.4%, 0.9% and 1% respectively. The November copper contract was at 50,170 yuan ($) per tonne.
Spot copper prices in Changjiang were down by 0.5% at 50,140-50,380 yuan per tonne and the LME/Shanghai copper arbitrage ratio is firmer at 8.09, after 8.07 on Thursday.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 1% at 494.50 yuan per tonne. On the SHFE, the January steel rebar contract was down by 2.6%, while the December gold and silver contracts were down by 0.8% and 0.7% respectively.
In wider markets, spot Brent crude oil prices were higher by 0.24% and were recently quoted at $81.48 per barrel. The yield on US 10-year treasuries has firmed to 3.0450%, having been as high as 3.1% on Wednesday. The German 10-year bund yield has weakened and was recently quoted at 0.4800%. The strength in the latter suggests safe-haven buying in Europe after Italy’s government agreed a higher budget, which will put it on collision course with Europe.
Asian equity markets were for the most part stronger on Friday: Nikkei (+1.33%), Kospi (-0.52%), the Hang Seng (+0.10%), the CSI 300 (+0.52%) and ASX200 (+0.43%). This follows a stronger performance in western markets on Thursday; in the United States, the Dow Jones closed up by 0.21% at 26,439.93, while in Europe, the Euro Stoxx 50 was up by 0.48% at 3,449.79.
The dollar index continues to react favorably to the US rate rise with a move up to 95.08 and has done a good job in negating the weakness seen over the past six weeks or so.
With the dollar stronger, the other major currencies we follow are weaker, especially the euro (1.1625) while Italy once again rocks the fiscal boat, sterling (1.3075), the Australian dollar (0.7215) and the yen has dropped through its 113.13-113.16 double bottom and was recently quoted at 113.38.
The yuan has also weakened and was recently quoted at 6.8845, while the emerging market currencies we follow are quite mixed and ranged between consolidating or strengthening. This suggests the latest dollar strength is more about other major currency market weakness and less about fresh emerging currency weakness.
The economic agenda is extremely busy on Friday, with data already out in Japan showing a strong improvement across the board – see table below for details. Data out later in Europe includes French consumer spending, consumer price index (CPI) data from France, Spain, Italy and the European Union, German unemployment and the United Kingdom’s current account, gross domestic product and business investment. US data includes personal income, spending and PCE prices, Chicago purchasing managers’ index (PMI) and revised University of Michigan consumer sentiment and inflation expectations. In addition, UK Monetary Policy Committee member David Ramsden is speaking.
The base metals prices are looking quite diverse, but rally attempts continue to struggle and higher prices are still attracting selling. Conversely, support seems to be in place – although in some metals it is looking more vulnerable than in others. The market action continues to be at odds with the LME data that is showing tighter spreads, some backwardations and across the board steady stock falls, with some stocks getting significantly low.
Overall, in this climate of uncertainty, consumers and would-be buyers may not feel in any hurry to chase the market higher – shorts on the other hand may be more nervous for the reasons mentioned above. As such, we expect choppy trading, especially with China on holiday next week.
Gold prices had been stuck sideways, but that changed on Thursday after the dollar’s rebound sent prices lower again. For once, silver prices are holding up slightly better than gold, as seen by the dip in the gold/silver ratio, while platinum is following silver’s lead. Palladium stands out alone, while its robust performance highlights its strong fundamentals.
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четверг, 27 сентября 2018 г.
METALS MORNING VIEW 27/09: Metals prices mixed after initial weakness
Three-month base metals prices on the London Metal Exchange were for the most part weaker during early trading on Thursday September 28, but some strength emerged after trading got underway in Europe.
Tin was bucking the trend with 0.3% gain, while the rest of the metals were down by between 0.4% for aluminium and lead and 0.9% for zinc prices, with copper off by 0.8% at $6,236 per tonne.
Total volume across the complex has been average with 9,667 lots traded as at 08.01am London time.
With the US Federal Open Market Committee (FOMC) meeting and a 25 basis-point interest rate rise out of the way, the base metals markets may have a few days to reflect their fundamentals before trading becomes thinner as China goes on holiday next week, which will be followed by LME Week.
The precious metals were firmer, with prices up by an average of 0.4%. Given the US interest rate rise you would expect prices to be weaker, but with spot gold prices at $1,195 per oz, it appears the market had already fully priced in the rate increase.
In China, the base metals prices were mirroring those on the LME, with January tin prices up by 1%, while the rest were weaker by an average of 1.1%. The most actively traded November copper contract was down by 0.9% at 50,130 yuan ($7,290) per tonne.
Spot copper prices in Changjiang were down by 0.3% at 50,560-50,620 yuan per tonne and the LME/Shanghai copper arbitrage ratio is firmer at 8.07.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 0.4% at 502 yuan per tonne. On the SHFE, the January steel rebar contract was down by 1%, while the December gold and silver contracts were down by 0.4% and 0.2% respectively.
In wider markets, spot Brent crude oil prices were higher by 0.66% and were recently quoted at $82.20 per barrel. The yield on US 10-year treasuries has eased to 3.0339%, having been as high as 3.1% on Wednesday. The German 10-year bund yield has strengthened and was recently quoted at 0.5327%.
Asian equity markets were mainly weaker on Thursday: Nikkei (-0.99%), Kospi (+0.7%), the Hang Seng (-0.35%), the CSI 300 (-0.40%) and ASX200 (-0.18%). This follows a weaker performance in western markets on Wednesday; in the United States, the Dow Jones closed down by 0.40% at 26,385.28, while in Europe, the Euro Stoxx 50 was down by 0.51% at 3,415.56.
The dollar index has reacted favorably to the US rate rise with a move up to 94.58, but with the interest rate rise expected, it will be interesting to see if it holds on to its gains, especially because US President Donald Trump wants a weaker dollar and the trend since mid-August has been downward.
With the dollar stronger, most of the other major currencies we follow are weaker: the Australian dollar (0.7225), sterling (1.3113) and the euro (1.1699), although the yen is rebounding off a double bottom and was recently quoted at 112.58 – the double low being at 113.13-113.16.
The yuan has also weakened and was recently quoted at 6.8770, while the emerging market currencies we follow are quite mixed; the rupiah and ringgit were weaker, while the rest were either consolidating or showing some strength.
On the economic agenda, data already out in Germany showed GfK consumer climate edge up to 10.6 from a previous reading of 10.5. Later, there is European data that includes Germany’s consumer price index (CPI), the European Union’s M3 money supply, EU private loans and a European Central Bank (ECB) economic bulletin. Italy also has a 10-year bond auction. US releases include durable goods orders, final gross domestic product (GDP), GDP price index, goods trade balance, wholesale inventories, initial jobless claims, pending home sales and natural gas storage numbers. In addition, ECB president Mario Draghi and US Federal Reserve chair Jerome Powell are speaking.
The base metals are looking quite diverse; zinc is leading on the upside, but the metal’s prices need to clear resistance at $2,564 per tonne to suggest a break higher; copper and nickel prices are consolidating last week’s gains, but are holding up reasonably well; tin and aluminium are trading sideways, while lead is weaker. Key now will be whether there will be further short-covering ahead of the week long holiday in China.
Overall, in this climate of uncertainty, consumers and would-be buyers may not feel in any hurry to chase the market higher – shorts on the other hand may be more nervous, especially because spreads are tighter. As such, we expect choppy trading to continue.
Gold prices are stuck in a sideways trading. Given escalating trade tensions, rising oil prices and some record breaking US equity markets of late, it may be that safe-havens will be needed again before too long and at these price levels gold may look a cheaper safe-haven. Palladium led the more industrial precious metals higher last week, but while it continues to strengthen, platinum and silver are now consolidating their gains.
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среда, 26 сентября 2018 г.
вторник, 25 сентября 2018 г.
METALS MORNING VIEW 25/09: Metals dip while China takes advantage of higher prices
With Chinese participants returning from holiday, they have taken to selling into the recent metal price gains, with the three-month base metals prices on the London Metal Exchange for the most part weaker during morning trading on Tuesday September 25.
Nickel bucked the general weakness with a 0.3% gain and tin was untraded, while the rest of the LME base metals were down by an average of 0.6%. Copper fell by 0.8% to $6,245 per tonne.
Total volume across the complex has been high with 11,609 lots traded as at 06.13am London time.
The precious metals gave a mixed performance this morning; gold and silver spot prices were little changed, with the former at $1,199.15 per oz, palladium prices were up by 0.2% and platinum prices were up by 0.5%. Palladium remains the only precious metal with an upside agenda, with prices trading at multi-month highs.
In China, the base metals prices were similarly mixed; the November contracts for copper and nickel were higher by around 1%, with copper at 50,170 yuan ($7,315) per tonne, the November zinc contract was little changed, while the November aluminium and lead contracts were down by 0.4% and 0.7% respectively and the January tin contract was off by 0.2%.
Spot copper prices in Changjiang were up by 0.9% at 50,390-50,620 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.04.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 1% at 500.50 yuan per tonne. On the SHFE, the January steel rebar contract was down by 1.2%, while the December gold and silver contracts were down by 0.3% and 0.5% respectively.
In wider markets, spot Brent crude oil prices were little changed but at high levels and were recently quoted at $81.35 per barrel. The yield on US 10-year treasuries continues to firm and was recently quoted at 3.0975%, which suggests the market is expecting another rate rise when the US Federal Open Market Committee (FOMC) meets on Wednesday. The German 10-year bund yield has strengthened and was recently quoted at 0.5082%.
Asian equity markets were for the most part weaker on Tuesday: Nikkei (+0.10%), Kospi (closed), the Hang Seng (-1.62%), the CSI 300 (-1.12%) and ASX200 (-0.10%). This follows a weaker performance in western markets on Monday that were rattled by an escalation in global trade tensions, with China saying it would not join trade talks unless the United States stops threatening to increase tariffs. In the US, the Dow Jones closed down by 0.68% at 26,562.05, while in Europe, the Euro Stoxx 50 was down by 0.59% at 3,410.44.
The dollar index is consolidating above its recent low and was recently quoted at 94.31, the low on September 21 was 93.81. The move below support at 94.30 had triggered a bearish Head-and-Shoulder Pattern and the rebound is now testing the breakdown level. We may not get a clear direction for the dollar until after the FOMC rate decision and statement on Wednesday. Given US President Donald Trump wants a weaker dollar and the potential damage the trade disputes are having on global confidence, it may be that the FOMC is seen to be less hawkish in Wednesday’s statement.
With the dollar consolidating, most of the other major currencies we follow are consolidating too: the Australian dollar (0.7244), sterling (1.3107) and the euro (1.1747), although the yen continues to weaken (112.86).
The yuan has also weakened and was recently quoted at 6.8635 and most of the emerging market currencies we follow are either weakening or are consolidating recent gains. The exception is the Russian rouble that is strengthening, no doubt benefitting from the stronger oil price.
On the economic agenda, data already out in Japan showed the services producer price index (PPI) rise 1.3%, after a previous increase of 1.1%. Later, there is the German wholesale price index (WPI) and US releases that include two house price indices, consumer confidence and the Richmond manufacturing index. In addition, UK Monetary Policy Committee member Gertjan Vlieghe is speaking.
We have expected the rebounds to be nervous while the trade disputes linger and that has been the case. What we have seen is some initial short-covering and there is likely to be more to be done, but while the rallies struggle to attract follow-through buying, the shorts may not feel too vulnerable.
Also in this climate of uncertainty, consumers and would-be buyers may not feel in any hurry to chase the market higher. As such, we expect choppy trading to continue. With a week-long holiday in China in early October and with LME Week following that, liquidity may tighten up and that could increase the risk of some fast moving markets.
Longer term, we do favor the upside from these levels, but some progress on trade talks is likely to be needed before the confidence really returns.
Gold prices are stuck in a sideways trading pattern and we wait to see the next direction for the dollar to see which way gold prices travel from here. Given escalating trade tensions, rising oil prices and some record breaking US equity markets, it may be that safe-havens will be needed again before too long and at these price levels gold may look a cheaper safe-haven. Silver remains weak with the gold/silver ratio at 1:84, palladium is standing out as the precious metal being driven by strong fundamentals and platinum seems to be getting a boost having been oversold.
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METALS MORNING VIEW 24/09: Metals prices shake off early weakness
Three-month base metals prices on the London Metal Exchange were initially unchanged to weaker on the morning of Monday September 24, with prices down by an average of 0.5%. Trading had been quiet with Chinese and Japanese markets closed for holidays, but prices firmed after European trading picked up.
Nickel led the decline with a 1.4% drop, followed by lead and zinc – which were off either side of 0.5%. The rest of were little changed, with copper at $6,355 per tonne.
Volume across the complex has been low with 3,639 lots traded as at 07.37am London time.
This follows a strong performance last Friday which was largely driven by short-covering. Nickel and copper led the rebounds with gains of 4.9% and 3.6% respectively.
The precious metals were weaker across the board with prices down between 0.3% and 0.6%, with spot gold prices at $1,195.50 per oz. A rebound in the dollar has weakened sentiment.
In wider markets, spot Brent crude oil prices were back above $80 per barrel and were recently quoted at $80.35, driven higher after Saudi Arabia and Russia seem in no hurry to raise output. The yield on US 10-year treasuries has eased and was recently quoted at 3.0677%. The German 10-year bund yield has also eased and was recently quoted at 0.4530%.
Most Asian equity markets are closed on Monday, but the Hang Seng is off by 1.78% and the ASX 200 is down by 0.12%.This follows a strong performance in western markets last Friday; in the United States, the Dow Jones closed up by 0.32% at 26,743.50, with the index earlier in the day setting a fresh record high at 26,769.16, while in Europe the Euro Stoxx 50 was up by 0.81% at 3,430.81.
The dollar index is rebounding from the weakness seen at the end of last week – it was recently quoted at 94.32 after a low of 93.81 last Friday. On the chart, the index has triggered a bearish Head-and-Shoulder Pattern, the rebound is now testing that breakdown level.
With the dollar firmer, most of the other major currencies we follow are consolidating recent gains: the Australian dollar (0.7259), the yen (112.51) and the euro (1.1730), although sterling is weaker at 1.3073.
On the economic agenda there is data on German Ifo business climate, Confederation of British Industry (CBI) industrial order expectations from the United Kingdom and a Bank of England Financial Policy Committee statement. In addition, European Central Bank President Mario Draghi is speaking.
Most of the base metals accelerated higher on Friday and the move seems to have been driven by short-covering, which was something the market was on the lookout for. With the trade tensions continuing, we wait to see if a fully-fledged rebound can get underway ahead of a trade agreement, but the stronger tone may well unnerve more of the shorts which could lead to further short-covering rallies.
Longer term, we do favor the upside from these levels.
Gold prices are struck in a sideways range either side of $1,200 per oz. The more industrial-based precious metals have been able to rally, but they are consolidating gains this morning as is the metals complex as a whole. For now we would watch the dollar, but with a US Federal Open Market Committee statement on Wednesday and high expectations for a rate rise, gold prices may face a headwind until after the rate decision.
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понедельник, 24 сентября 2018 г.
воскресенье, 23 сентября 2018 г.
суббота, 22 сентября 2018 г.
пятница, 21 сентября 2018 г.
METALS MORNING VIEW 21/09: Metals see follow-through buying, weaker dollar providing support
Three-month base metals prices on the London Metal Exchange were once again higher across the board by an average of 0.5% on the morning of Friday September 21. This follows Thursday’s generally bullish performance that saw the base metals complex close with gains averaging 0.7%.
Nickel and copper led on the upside this morning with gains of 1.3% and 0.9% respectively, with the red metal recently quoted at $6,173 per tonne.
Volume across the complex has been high with 11,481 lots traded as at 07.06am London time – price gains on high volume bode well.
The precious metals were stronger too with prices up by an average of 0.4%, with spot gold prices up by 0.2% at $1,209.20 per tonne. The drop in the dollar is no doubt helping sentiment.
In China, the base metals prices were for the most part stronger this morning, the exception was lead where the October contract was down by 0.5%, while the rest were firmer. November aluminium was up by 0.5%, the rest of the metals were up between 1.1% for copper and 1.9% for nickel. The most actively traded November copper contract was recently quoted at 49,970 yuan ($7,294) per tonne.
Spot copper prices in Changjiang were up by 0.2% at 49,870-50,200 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.10.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 0.1% at 502 yuan per tonne. On the SHFE, the January steel rebar contract was down by 0.1%, while the December gold and silver contracts were up by 0.3% and 1.7% respectively. Silver prices have been climbing at a faster pace than gold prices for the second consecutive day now.
In wider markets, spot Brent crude oil prices were recently quoted at $78.92 per barrel, up by 0.36% this morning, but prices are down from where they were at a similar time on Thursday when they were quoted at $79.67 per barrel. The yield on US 10-year treasuries continues to strengthen and was recently quoted at 3.0759%, which suggests the market is expecting another rate rise when the US Federal Open Market Committee meets next week. Indeed the market expects a 92% chance of a 25 basis point rise to 2.25%. The German 10-year bund yield has eased and was recently quoted at 0.4760%.
Asian equity markets were for the most part stronger on Friday: Nikkei (+0.82%), Kospi (+0.68%), the Hang Seng (+1.25%) and the CSI 300 (+2.54%). This follows a strong performance in western markets on Thursday in the United States; the Dow Jones closed up by 0.95% at 26,656.98, with the index earlier in the day setting a fresh record high at 26,697.49, while in Europe the Euro Stoxx 50 was up by 1.03% at 3,403.12.
The dollar index has broken below support at 94.30 and was recently quoted at 93.96. On the chart it has triggered a bearish head-and-shoulder pattern. The break lower is expected to lend support to the metals, many of which seem to be looking for an excuse to rally from oversold levels.
With the dollar weaker, most of the other major currencies we follow are strengthening: the Australian dollar (0.7292), sterling (1.3253) and the euro (1.1779), although the yen remains weak at 112.84.
The yuan is slightly firmer, and was recently quoted at 6.8360, and most of the emerging market currencies we follow are rebounding after recent weakness. This suggests a degree of risk-on is returning.
On the economic agenda, data already out in Japan has generally shown some strength, compared with previous readings. Data out later includes flash manufacturing and services purchasing managers’ index (PMI) releases which are out across Europe and the United States, as well as UK data on public sector borrowing and the Bank of England quarterly bulletin.
The base metals are looking well placed to extend gains having recently put in and tested support since the mid-August lows. The combination of oversold markets, a weakening dollar, strong equities and an apparent return of risk-on sentiment in emerging markets all bode well for the metals.
The fact equities are strong despite the continuing uncertainty over global trade tensions and Brexit, either suggests a lot of complacency, or confidence that eleventh-hour deals will be sorted. Whether fully fledged rebounds can get underway ahead of a trade agreement remains to be seen, but a stronger tone may well unnerve some of the shorts that could lead to short-covering rallies.
Longer term, we do favor the upside from these levels.
Gold prices are also looking firmer and well placed to rebound and the weaker dollar may well fuel that. The other precious metals may well benefit from a firmer gold as well as the stronger industrial metals.
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четверг, 20 сентября 2018 г.
PLATINUM TODAY: Rebound showing signs of stalling
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Analysis
Macro drivers Despite the price rout, there has been only limited evidence of dip-buying among investors. Exchange-traded fund (ETF) holdings total 2.370 million oz compared with 2.257 million oz in early July. Despite slowing sales in the United States and China, the world’s two-largest vehicle markets, light vehicle sale globally continue to carry positive momentum rising 2.7% year on year in August, according to LMC Automotive. Sales globally were up 3.1% year on year in January-August. Platinum demand has suffered as a result of falling demand for diesel-engine vehicles, sales of which dropped 16% in January-June compared with same period of last year, according to the European Automobile Manufacturers’ Association (ACEA). Autocatalyst demand also faces potentially huge headwinds in the long term, resulting from the electric vehicle revolution. The impact of weaker demand and robust supply are set to keep the market in a surplus, which the World Platinum Investment Council (WPIC) forecasts will total 295,000 ounces in 2018, up from the 180,000-oz surplus forecast in May. Impala Platinum, the world’s second-largest platinum producer, plans to cut future production by 30% over the next two years following its strategic review. Impala will close a total of five mines, cutting annual production to 520,000 oz from around 750,000 oz currently. The Association of Mineworkers and Construction Union has threatened industrial action in response, as well as calling on the government to nationalize the five mine shafts that Impala has proposed closing. Other producers are in the process of restructuring their operations. Lonmin is in the process of closing old mines and developing newer, lower-cost operations. Yet greater supply restraint is necessary to break the weak price sentiment. Conclusion |
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All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
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METALS MORNING VIEW 20/09: Metals prices firmer, but light volumes so far
Three-month base metals prices on the London Metal Exchange were higher across the board by an average of 0.7% on the morning of Thursday September 20. For now, the market seems to be grateful that the latest round of tariffs from the United States stood at 10% and not the 25% initially threatened.
Lead and zinc were the outperformers with gains of 1.1%, followed by copper, aluminium and nickel which were up between 0.5% and 0.5%. Tin was the laggard with an increase of 0.3%.
Volume across the complex has been low with 3,952 lots traded as at 06.41am London time – price gains on low volume do not necessarily bode well.
Gold prices were slightly firmer, up by 0.1% at $1,204.95 per oz, while the more industrial precious metals of silver, palladium and platinum were up between 0.4% and 0.5%.
In China, the base metals prices were also up across the board on the Shanghai Futures Exchange; the most actively traded November copper contract price was up just 0.1% at 49,510 yuan ($7,223) per tonne, but the rest were stronger with gains between 0.6% for November aluminium and 2.2% for November zinc.
Spot copper prices in Changjiang were down by 0.2% at 49,850-49,980 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.09.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 1% at 504 yuan per tonne. On the SHFE, the January steel rebar contract was up down by 0.7%, while the December gold and silver contracts were up by 0.3% and 1.3% respectively.
In wider markets, spot Brent crude oil prices have strengthened and were recently quoted at $79.67 per barrel, up by 0.49% this morning. The yield on US 10-year treasuries continues to firm and was recently quoted at 3.0600%, which suggests the market is expecting another rate rise when the US Federal Open Market Committee meets next week. Indeed the market expects a 92% chance of a 25 basis point rise to 2.25%. The German 10-year bund yield was also stronger at 0.4800%.
Asian equity markets were for the most part stronger on Thursday; the exception was the ASX 200 that was down 0.31%, while the rest were up: Nikkei (+0.20%), Kospi (+0.78%), the Hang Seng (+0.21%) and the CSI 300 (+0.11%). This follows a firmer performance in western markets on Wednesday; in the United States, the Dow Jones closed up by 0.61% at 26,405.76, while in Europe the Euro Stoxx 50 was up by 0.30% at 3,368.56.
The dollar index is under pressure and is looking vulnerable. It was recently quoted at 94.50, with recent support in the 94.30 to 94.43 range. A break lower could lend support to the metals, many of which seem to be looking for an excuse to rally from oversold levels.
With the dollar weaker, most of the other major currencies we follow have an upside bias, especially the Australian dollar (0.7258), while sterling (1.3146) and the euro (1.1682) are consolidating in recent high ground, although the yen remains weak at 112.16.
The yuan is treading water around recent levels and was recently quoted at 6.8488 and most of the emerging market currencies we follow are rebounding after recent weakness. This suggests a degree of risk-on is returning.
On the economic agenda there is data on UK retail sales along with US releases including the Philadelphia Fed Manufacturing Index, initial jobless claims, consumer confidence, leading indicators, existing home sales and natural gas storage. In addition, German Bundesbank President Jens Weidmann is speaking.
Once again, most of the base metals seem to be getting some lift off of recent lows, with the recent lows holding above those reached in mid-August. This suggests bases have been built and buying dominates at the lower numbers – we have to see whether the sellers still dominate at the higher numbers. Physical trading is reportedly strong, seasonally this is also a strong time of year for industrial demand and there are reportedly large short positions in the metals – so prices have numerous reasons to rise, but sentiment remains depressed by the continuing trade disputes.
The fact the dollar is looking weak and the market has not had too negative a reaction to the latest round of tariff increases suggests a lot of the bad news is in the price. Until the trade disputes are settled, which may not be until around the US mid-term elections, it may be hard for the metals to reflect their tightening fundamentals. As such for now, we expect choppy trading with attempted rallies, short-covering and further shorting into strength.
Longer term, we do favor the upside from these levels.
Gold prices have followed in the tracks of the base metals and prices are consolidating above recent lows, as are silver prices. Palladium prices lead on the upside and platinum prices are following its lead. The gold/silver ratio remains weak at 84.30, should gold prices start to move higher, we would expect silver prices to follow at a faster pace.
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среда, 19 сентября 2018 г.
вторник, 18 сентября 2018 г.
METALS MORNING VIEW 18/09: Metals market relieved new US tariffs were not more damaging
Three-month base metals prices on the London Metal Exchange were for the most part firmer this morning, Tuesday September 18. This despite US President Donald Trump imposing 10% tariffs on a further $200 billion of Chinese exports – the market no doubt relieved it was not 25%.
The exception to the stronger showing by the LME base metals was lead, which was down by 0.7%. The rest of the complex saw of gains of between 0.1% for tin and 0.7% for zinc, with copper up by 0.2% at $5,964 per tonne.
Volume across the complex has been above average with 9,815 lots traded as at 07.02am London time.
The precious metals were firmer with gold and silver prices up between 0.1% and 0.2% with spot gold at $1,199.45 per oz, while platinum prices were up by 0.9% and palladium prices were up by 0.3%.
In China, base metals prices were mixed on the Shanghai Futures Exchange, November copper and zinc were up by 0.7% and 1.5% respectively, with copper at 48,480 yuan ($7,060) per tonne, while the rest were down between 0.2% for tin and 1.3% for nickel.
Spot copper prices in Changjiang were up by 1.3% at 48,710-49,030 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.11.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 1% at 506.50 yuan per tonne. On the SHFE, the January steel rebar contract was up by 0.6%, while the December gold and silver contracts were little changed.
In wider markets, spot Brent crude oil prices have weakened and were recently quoted at $77.67 per barrel, down by 0.33% this morning. The yield on US 10-year treasuries was at 3.0044%, and the German 10-year bund yield was at 0.4600%.
Asian equity markets were for the most part stronger on Tuesday, again suggesting the tariff changes could have been worse: Nikkei (+1.41%), Kospi (+0.26%), the Hang Seng (+0.19%) and the CSI 300 (+1.52%), although the ASX 200 was down 0.38%. This follows a mixed performance in western markets on Monday; in the United States, the Dow Jones closed down by 0.35% at 26,062.12, while in Europe the Euro Stoxx 50 closed up by 0.04% at 3,346.11.
The dollar index is under pressure and is looking vulnerable. It was recently quoted at 94.44, with recent support in the 94.35 to 94.43 range. A break lower could lend support to the metals, many of which seem to be looking for an excuse to rally from oversold levels.
With the dollar weaker, most of the other major currencies we follow are either climbing, or looking to push through resistance: sterling (1.31.58), the euro (1.1705), the Australian dollar (0.7215), although the yen is weakening 112.21.
The yuan is treading water around recent levels and was recently quoted at 6.8359 and most of the emerging market currencies we follow are consolidating after their recent significant weakness.
The economic agenda is light today with data on US housing and long term treasury international capital (TIC) purchases. In addition, European Central Bank President Mario Draghi is speaking.
The base metals seem to be base building. The lows in mid-August were followed by rebounds that stalled and prices have since retreated to test the quality of underlying buying, which seems to be good, as for the most part the support levels have held. The exception has been nickel, where the August lows gave way.
The fact the dollar is looking weak and the market has not yet had too negative a reaction to the latest round of tariff increases, suggests a lot of the bad news is in the price, although should China retaliate the market may think again. Until the trade disputes are settled, which may not be until after the US mid-term elections, it may be hard for the metals to reflect their tightening fundamentals. As such for now, we expect choppy trading with attempted rallies, short-covering and further shorting into strength.
Longer term, we do favor the upside from these levels.
Gold prices have followed in the tracks of the base metals and prices are consolidating above recent lows, as are platinum prices. Palladium prices are showing relative strength in line with their fundamentals, while silver continues to struggle with the gold/silver ratio out at 84.8.
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понедельник, 17 сентября 2018 г.
воскресенье, 16 сентября 2018 г.
суббота, 15 сентября 2018 г.
пятница, 14 сентября 2018 г.
четверг, 13 сентября 2018 г.
METALS MORNING VIEW 13/09: Short-term buying returns on easing trade tensions, weaker dollar
Following a strong close in the previous session, the three-month base metals prices on the London Metal Exchange were mostly consolidating their recent gains during early trading on Thursday September 13.
Copper and lead were largely unchanged, while the rest of the complex has consolidated lower; aluminium (-0.5%) led the decline, closely followed by zinc (-0.4%), while nickel and tin were both down by 0.1%. As a result, the overall market configuration of the LME base metals was a touch weaker this morning, down by 0.2% on average.
Volume has been low with a total of 3,309 lots traded across the LME base metals complex as at 6.25am London time this morning. This compares with 3,942 lots and 4,867 lots traded at roughly the same time on Tuesday and Wednesday respectively.
In the precious metals space, some selling has emerged in gold and silver, with both metals’ prices down by 0.1%. The more industrial precious metals of platinum and palladium fared better, with prices up by 0.7% and 0.1% respectively.
With the United States keen to get China back to the negotiating table and the postponement of an additional $200 billion worth of tariffs on Chinese goods, a relief rally got underway across the base metals traded on the Shanghai Futures Exchange this morning.
Nickel was the outperformer of the SHFE base metals, with its most-traded November contract rising by 2.4% to 103,960 yuan ($15,136) per tonne, with the November copper and October zinc contracts close behind with gains of 2% and 1.7% respectively. The October lead contract secured an increase of 0.5%, while the November aluminium and January tin contracts bucked the general strength to drop by 0.5% and 0.2% respectively. On balance, the SHFE base metals achieved a solid 1% gain.
Spot copper prices in Changjiang were up by 1.5% at 48,550-48,690 yuan per tonne and the LME/Shanghai copper arbitrage ratio has dipped lower to 7.25.
In other metals in China, the January iron contract traded on the Dalian Commodity Exchange rose 2% to 499 yuan per tonne. On the SHFE, the December gold and silver contracts ticked up by 0.5% and 0.6% respectively.
In wider markets, the spot Brent crude oil price has retreated lower from its September high at $80.09 per barrel, it was down by 0.46% to trade at $79.31 per barrel this morning. In the bond market, the yield on US 10-year treasuries was up by 0.16% to 2.9663, while the German 10-year bund yield was steady at 0.4000%.
Wednesday’s positive close for equities in the US and Europe has boded well for their Asian counterparts this morning. The Dow Jones Index closed up by 0.11% on Wednesday, while the S&P 500 Index managed to eke out a mild gain of 0.04%. In Europe, the Euro Stoxx 50 Index ended yesterday up by 0.45%, while the FTSE 100 Index registered a gain of 0.55%.
As such, risk-on sentiment has filtered through to the Asian indices this morning; the Nikkei 225 gained 0.97%, Topix rose by 1.1%, the Hang Seng Index jumped 1.54% and some bargain buying returned to China’s CSI 300 Index, which ticked up by 0.2%. The ASX 200 Index was an exception to the stronger showing in Asia, with a decline of 0.76% this morning.
A weaker dollar is a tailwind for the commodity sector, with both base and precious metals benefitting from this weakness. The dollar index was trading below 95.00 this morning and based on its daily technical configuration, further downside could emerge if the potentially bearish Head and Shoulder Formation is triggered.
It is a busy day on the economic front, with Japan core machinery orders up by a solid 11%, but the country’s producer price index (PPI) was below expectations at 3%. Data from the European Union on Thursday will focus on consumer prices from Germany and France, while the Bank of England (BoE) will report on its official bank rate, asset purchase facility and provide a summary on its monetary policy. Brexit remains the biggest factor that will continue to undermine the BoE’s ability to normalize rates. Later on Thursday, we have consumer prices and unemployment claims from the US.
The US’ latest invitation for China to resume trade talks has provided much-needed relief for base and precious metals. With so much negativity generated by the escalating trade tensions between the two countries, the move was a welcomed sign in the market. This again highlights how sensitive the metals remain to macro risk events, which seemingly continue to trump fundamentals. The base metals complex has so far managed to keep a hold of the gains made on Wednesday, but the big question that remains is if they can sustain the rebound momentum or whether this is just another short-term relief rally that will soon fizzle out?
The same view can be applied to the precious metals. As the dollar index retreats lower, gold and silver prices have managed to bounce higher. We said before that at these low prices, investors may well turn to these metals as a relatively cheap haven asset at a time when global market confidence remains fragile.
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среда, 12 сентября 2018 г.
METALS MORNING VIEW 12/09: Base metals prices recover, but trade jitters linger
Three-month base metals prices on the London Metal Exchange were in a steadier tone so far on Wednesday September 12, after they closed broadly lower on Tuesday amid dollar strength and rising trade war concerns.
Lead (+0.7%) and sister metal zinc (+0.5%) were leading the gains, with aluminium and copper up by more modest amounts of 0.3% and 0.1% respectively, while nickel (-0.1%) and tin (-0.5%) were in negative territory.
Trading volumes have been relatively light this morning, with 4,867 lots traded across the LME base metals as at 6.35am London time.
The precious metals, meanwhile, remained on the defensive, with the complex down by an average of 0.2% this morning. A firm dollar continues to create headwinds; data from the United States on Tuesday continues to fuel expectations for monetary tightening by the US Federal Reserve after job openings reached a record high and supported wage growth expectations.
In China, the base metals prices on the Shanghai Futures Exchange were mixed with zinc (+1.5%), nickel (+0.7%), lead (+0.3%) and copper (+0.2%) in positive territory, while aluminium (-0.2%) and tin (-0.4%) weakened.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange dropped by 0.7% to 492 yuan ($72) per tonne. On the SHFE, January steel rebar contract was down by 1.4% at 4,039 yuan per tonne, while the December gold contract was up by 0.1% and the December silver contract was down by 0.2%.
In wider markets, spot Brent crude oil prices were up by 0.4% at $79.41 per barrel, bolstered by supply disruption concerns.
Equities in Asia remained under pressure on Wednesday, testing multi-month lows as the threat of escalating trade tensions continue to undermine investor confidence; the Nikkei 225 was down 0.4%, with similar falls in the CSI 300 (-0.3%), Hang Seng (-0.2%) and ASX 200 (-0.1%).
In currencies, the dollar remains well bid against its major peers despite reports Chinese authorities intend to seek permission from the World Trade Organization to sanction the US for failing to comply with a ruling that deemed some of its anti-dumping rules to be illegal.
Economic data overnight showed consumer sentiment in Australia slowed in September following the rise in mortgage rates and political instability. Industrial production is due from the Eurozone ahead of figures from the US forecast to show producer prices rose 0.2% in August. The core producer price index (PPI) is seen unchanged at 0.2%. In addition, the US Federal Reserve will publish its latest Beige Book.
While the base metals were in a firmer mood on Wednesday, the complex is still struggling to hold on to any meaningful price gains while the market awaits some clarity on the US trade position. If US President Donald Trump follows through with his threat of fresh tariffs on Chinese goods another period of risk-off is likely to follow.
In the precious metals, lower prices are starting to attract stronger demand for coins and bars among individual retail investors. For the moment, rising real interest rates continue to deter institutional investors, although in view of the elevated fund short exposure, a modest relief rally could emerge after next Federal Reserve meeting on September 26. Another round of tariffs and signs of emerging market contagion could be the catalyst to increase demand for haven assets.
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вторник, 11 сентября 2018 г.
METALS MORNING VIEW 11/09: Base metals prices find short-term support amid simmering trade tensions
Three-month base metals prices on the London Metal Exchange were mostly stronger during morning trading on Tuesday September 11.
Zinc and tin led the advance with rises of 0.6%, followed by gains of 0.4% and 0.2% in aluminium and copper respectively. Nickel was largely flat, while lead dropped by 0.4% to $2,010 per tonne. Still, the overall configuration of the LME base metals complex was positive, with an average gain of 0.2%.
Volume was below average, however, with only 3,942 lots having been traded across the complex as at 6.09am London time.
The precious metals were split this morning, with spot gold and spot silver prices down by 0.2% and 0.1% respectively. The more industrial precious metals were stronger, however, with platinum and palladium prices up by 0.5% and 0.3% respectively.
In China, base metals prices on the Shanghai Futures Exchange were mixed. On the downside were the most-traded October lead and zinc contracts with falls of 1.2% and 0.7% respectively, which was enough to offset the gains made by its peers. Nickel was the outperformer of the SHFE complex this morning, with the metal’s most-traded November contract rising 0.7% to 102,510 yuan ($14,942) per tonne. The rest were also up but to lesser extents, with the January tin contract up by 0.5%, the October copper contract up by 0.4% and the October aluminium contract edging 0.2% higher.
Spot copper prices in Changjiang were up by 0.2% at 47,850-47,940 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.13, compared with 8.09 on September 7.
In other metals in China, the January iron ore contract traded on the Dalian Commodity Exchange was down by 0.7% to 494.50 yuan per tonne. On the SHFE, the December gold and silver contracts were both up by 0.1%, while the January steel rebar contract dipped by 2.2% 4,161 yuan per tonne, with the latter retreating amid rising concerns that the Chinese economy has started to cool.
In wider markets, a decent level of bidding was seen in Brent crude oil this morning, with spot prices up by 0.35% at $77.55 per barrel. In bonds, the yield on US 10-year treasuries was firmer this morning at 2.9369%, while the German 10-year bund yield was flat at 0.4027%.
Western equities gave a mixed performance on Monday; in the United States the Dow Jones ended the day down 59 points or 0.23%, while the S&P500 managed to secure a marginal gain of 0.19%. European equities had a better day on Monday, with the Euro Stoxx up by 0.46% to 3,309 by yesterday’s close. Asian equities were broadly firmer this morning, with the Nikkei up by a solid 1.19%, Topix 0.62% higher and the ASX 200 gaining 0.64%. But simmering trade tensions between China and the US remain a cause for concern among investors, keeping buyers on the sidelines in certain markets, which saw the likes of the Hang Seng and CSI 300 decline this morning, with falls of 0.35% and 0.10% respectively.
The dollar index was a touch lower this morning at 95.06 and based on its daily technical configuration, further downside could emerge. An easier dollar should provide broad-based support for base and precious metals alike in the coming days. This has provided some relief for emerging currencies this morning, with the Turkish Lira strengthening to 6.4626.
The major currencies we follow are similarly firmer with the yuan at 6.8651, the Euro at 1.1614, Sterling at 1.3052 and the Australian dollar at 0.7126.
In data today, we have the average earnings index, claimant count change and the unemployment rate from the United Kingdom, as well as the German ZEW economic sentiment. US data of note today includes final wholesale inventories and Jolts job openings.
Despite growing signs of physical tightness across the base metals complex, a negative macroeconomic backdrop continues to trump fundamentals. The upside momentum remains capped, with buyers reluctant to establish their dominance due to the simmering trade tensions between the US and China. Concerns over a fresh set of US tariffs targeting $200 billion worth of Chinese goods, due to come into effect last week, and Chinese authorities’ vows to retaliate against any further tariffs continue to undermine market confidence. As such, global risk sentiment remains clouded by fear and uncertainty.
But so far, these conditions have failed to attract fresh demand for haven assets. Gold has rebounded well from its 2018 low at $1,160 per oz, but has not been able to sustain a move above $1,200 per oz. Meanwhile, silver prices are battling to stay above $14.00 per oz. Still, with gold and silver at these low price levels, investors may well turn to these metals as a relatively cheap haven asset should they need one.
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понедельник, 10 сентября 2018 г.
воскресенье, 9 сентября 2018 г.
суббота, 8 сентября 2018 г.
пятница, 7 сентября 2018 г.
METALS MORNING VIEW 07/09: Metals remain on the defensive while market awaits news on US-China tariffs
Three-month base metals prices on the London Metal Exchange were for the most part weaker this morning, Friday September 7, which follows another mixed performance by the complex on Thursday.
Nickel continued to lead on the downside with a 1.6% drop, while aluminium also bucked the down trend with a 0.3% gain. The rest were down between 0.1% for lead and 0.7% for zinc, with copper prices down by 0.6% at $5,873 per tonne.
Volume across the complex has been above average with 8,839 lots traded as at 07.06am London time.
The precious metals were little changed this morning; spot silver prices were down by 0.2%, platinum prices were up by 0.2%, palladium prices were up by 0.1% and spot gold prices were slightly firmer at $1,200.40 per oz. This follows a generally firmer day on Thursday.
In China, the base metals prices were mixed on the Shanghai Futures Exchange; the November nickel contract leads on the downside with a 0.8% drop, while the January tin and October aluminium contracts were down by 0.3% and 0.1% respectively. The others were higher with the October zinc contract up by 0.7%, the October lead contract up by 0.3% and the most actively traded October copper contract up by 0.1% at 47,570 yuan ($6,964) per tonne.
Spot copper prices in Changjiang were up by 0.2% at 47,920-48,100 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.09.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 0.6% at 499 yuan per tonne. On the SHFE, the January steel rebar contract was up by 2.6%, while the December gold contract was 0.4% higher, while the December silver contract was unchanged.
In wider markets, spot Brent crude oil prices have weakened and were recently quoted at $76.50 per barrel, down by 0.17% this morning. The yield on US 10-year treasuries was weaker at 2.8760%, as was the German 10-year bund yield at 0.3600%.
Asian equity markets were weaker again on Friday as emerging market and US trade concerns persisted: Nikkei (-0.80%), the ASX 200 (-0.27%), Kospi (-0.31%), the Hang Seng (-0.40%) and the CSI 300 (-0.05%). This follows a mixed performance in western markets on Thursday; in the United States, the Dow Jones closed up by 0.08% at 25,995.87, while in Europe the Euro Stoxx 50 closed down by 0.59% at 3,295.95.
The dollar index is drifting after its recent rebound attempt, it was recently quoted at 94.94. With the dollar paused, the pressure on other broader markets has eased. We see key resistance at 95.70 and support at 94.43.
With the dollar easier, most of the other major currencies we follow are firmer: sterling (1.2941), the euro (1.1638), the yen (110.63), although the Australian dollar is weaker at 0.7151.
The yuan is treading water around recent levels and was recently quoted at 6.8359 and most of the emerging market currencies we follow are consolidating after their recent bout of significant weakness.
The economic agenda is busy today, with data already out in Japan and Germany showing a broadly weaker picture – see table below. Data out later includes industrial production, government trade balance and trade balance from France, UK house prices and consumer inflation expectations, Italian retail sales, the European Union’s gross domestic product and the monthly US employment report.
The base metals continue to struggle to hold onto any prices gains so sellers are still capping the upside, but for most of the metals, with the exception of nickel, the lower prices are attracting buying.
The world is anxiously waiting to see if US President Donald Trump follows through with his threat of fresh tariffs on $200 billion worth of Chinese goods now that public comment period has expired. If he does, another period of risk-off is likely to follow.
Overall, we do favor the upside from these levels, but the metals may need to build more of a base while the market waits for a solution to the trade disputes.
Gold prices have followed in the tracks of the base metals and prices are consolidating above recent lows. At these price levels in gold and silver, investors may well see bullion as a relatively cheap haven asset, should they need one. Another round of tariffs may well increase demand for havens.
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четверг, 6 сентября 2018 г.
METALS MORNING VIEW 06/09: Metals prices consolidate while they wait for developments in broader markets
Three-month base metals prices on the London Metal Exchange were on divergent paths this morning, Thursday September 6, after a mixed performance on Wednesday.
Zinc led on the upside with a 0.9% rebound, while nickel remained under pressure with a 0.5% fall. Lead was up by 0.3% while the rest were little changed, with copper prices at $5,883 per tonne.
Volume across the complex has been above average with 7,399 lots traded as at 06.40am London time.
Palladium continues to outshine the other precious metals with spot prices up by 0.3% at $974.80 per oz, while spot gold prices were unchanged at $1,196.57 per oz and silver and platinum prices were off by 0.1%. The gold/silver ratio is at 1:84 – it was last at this level in December 2008.
In China, there were more base metals prices in positive territory than in negative territory on the Shanghai Futures Exchange, with the October zinc contract up by 2% and the most actively traded October copper contract up by 0.9% at 47,700 yuan ($6,978) per tonne. The November nickel and October aluminium contracts were up by 0.3% and 0.2% respectively, while the October lead and January tin contracts were down by 0.2% and 0.4% respectively.
Spot copper prices in Changjiang were up by 0.6% at 47,840-48,030 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.11 – the rising ratio suggesting LME copper prices are leading the weakness compared with SHFE copper prices.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 1.7% at 495 yuan per tonne. On the SHFE, the January steel rebar contract was up by 1.2%, while the December gold and silver contracts were up by 0.5% and 0.3% respectively.
In wider markets, spot Brent crude oil prices have edged higher again and were recently quoted at $77.20 per barrel, up by 0.09% this morning. The yield on US 10-year treasuries was firmer at 2.9090%, as was the German 10-year bund yield at 0.3815%.
Asian equity markets were weaker on Thursday as emerging market and US trade concerns persisted: Nikkei (-0.35%), the ASX 200 (-1.24%), Kospi (-0.16%), the Hang Seng (-1.13%) and the CSI 300 (-0.70%). This follows a mixed performance in western markets on Wednesday; in the United States, the Dow Jones closed up by 0.09% at 25,974.99, while in Europe the Euro Stoxx 50 closed down by 1.30% at 3,315.62.
The dollar index is consolidating after its recent rebound and was recently quoted at 95.16. With the dollar paused, the pressure on other markets has eased. We see key resistance at 95.70 and support at 94.43.
With the dollar consolidating, so are most of the other major currencies we follow: sterling (1.2904), the euro (1.1624), the yen (111.34) and the Australian dollar (0.7169).
The yuan is treading water around recent levels and was recently quoted at 6.8369 and most of the emerging market currencies we follow are consolidating after their recent significant weakness.
The economic agenda is focused on the US today, although earlier there was data on German factory orders that fell 0.9%, but that was after a 3.9% decline previous and it is an erratic data series. Data out later includes Challenger job cuts, ADP non-farm employment change, revised non-farm productivity and labor costs, initial jobless claims, final services purchasing managers’ index, factory orders and crude oil inventories. In addition, US Federal Open market Committee Member John Williams is speaking.
For the most part base metals’ prices are consolidating after the second-half of August rebounds and it is only nickel that has extended lower. Key now will be whether the metals are seen to build bases above the August lows, if they do then physical buyers may be more confident to do more pricing to take advantage of the weaker prices. If the downside then looks limited it could start to prompt short-covering.
Overall, we do favor the upside from these levels, but the market may need to build more of a base before buyers are prepared to chase prices higher.
Gold prices have followed in the tracks of the base metals and prices are consolidating above recent lows, as are platinum prices, while palladium prices have rebounded strongly and are holding on to their gains. Silver prices have continued to tumble, the put in a low on Wednesday at $14.008 per oz, which is just 2.7% above the December 2015 low. At these price levels in gold and silver, investors may well see bullion as a relatively cheap haven asset, should they need one.
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среда, 5 сентября 2018 г.
METALS MORNING VIEW 05/09: Metals consolidate, market focus shifts to emerging markets
Three-month base metals prices on the London Metal Exchange were for the most part little changed this morning, Wednesday September 5, with consolidation mode setting in after Tuesday’s losses.
The main exceptions were nickel, which was down by 0.4%, and lead, which was up by 0.4%. Aluminium was up by 0.2%, while the rest were either side of unchanged. Copper was up by 0.1% at $5,846 per tonne.
Volume across the complex has been average with 5,832 lots traded as at 06.54am London time.
Gold, platinum and palladium prices were up by 0.2%, with spot gold prices at $1,193.58 per tonne, while silver prices were down by 0.1% at $14.11 per oz. This follows a day of losses for gold, silver and platinum on Tuesday that saw prices fall by an average of 1.5%, led by a 2.5% drop in silver prices, while palladium prices closed up by 0.1%.
In China, the base metals prices on the Shanghai Futures Exchange were for the most part lower – the exception once again being tin, the January contract price of which was up by 0.5%. The others were weaker, led by a 2.2% decline in October zinc and 2.1% fall in November nickel. Copper, aluminium and lead were down by 1.4%, 0.9% and 1.7% respectively, with the most actively traded October copper contract recently quoted at 47,320 yuan ($6,921) per tonne.
Spot copper prices in Changjiang were down by 1.2% at 47,530-47,730 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.09 – the rising ratio suggesting LME copper is leading the weakness compared with SHFE copper prices.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 0.1% at 485 yuan per tonne. On the SHFE, the January steel rebar contract was down by 0.8%, while the December gold and silver contracts were down by 0.3% and 2.0% respectively.
In wider markets, spot Brent crude oil prices have eased and were recently quoted at $77.58 per barrel, down by 0.35% this morning. The yield on US 10-year treasuries was firmer at 2.8954%, as was the German 10-year bund yield at 0.3480%.
Asian equity markets were weaker on Wednesday: Nikkei (-0.41%), the ASX 200 (-1.00%), Kospi (-0.99%), the Hang Seng (-2.23%) and the CSI 300 (-1.40%). This follows a weaker performance in western markets on Tuesday; in the United States, the Dow Jones closed down by 0.05% at 25,952.48, while in Europe the Euro Stoxx 50 closed down by 1.05% at 3,359.36.
The dollar index is rising again having rebounded on August 31 and was recently quoted at 95.50. The stronger dollar is once again putting downward pressure on metals prices. On the chart, the move above 95.66 on August 10 suggested the index had triggered a bullish Head-and-Shoulders Pattern. Prices then corrected to test its breakout level and are now rebounding again. We wait to see if the index can climb back above that breakout level again.
With the dollar stronger, the other major currencies we follow are weaker: sterling (1.2842), the euro (1.1573), the yen (111.52) and the Australian dollar (0.7175).
The yuan is slightly weaker and was recently quoted at 6.8378, but most of the emerging market currencies we follow are weakening and as a barometer that suggests investors are getting increasingly nervous.
The economic agenda is busy today but is mainly focused on services purchasing managers’ index (PMI) data out across Europe. Data out already shows China’s Caixin services PMI drop to 51.5 from 52.8. In addition, there is data on the European Union’s retail sales and the US trade balance. Data out overnight showed US total vehicle sales ease to an annualized rate of 16.7 million units, down from 16.8 million units previously.
The weakness in the metals continues, as well as sentiment remaining weak on the trade disputes, investors are now getting nervous about the developing situations in a number of emerging markets. Collectively these are strong headwinds, but with metals prices already low and with the funds short, you have to wonder how much further the sell-off can go. These are dangerous waters as US President Donald Trump could push his “America First” policy too far and trigger a financial crisis, while equally he could announce that a trade agreement is in the making and send everything into reverse.
Overall, we do favor the upside from these levels, but the market may need to build more of a base before buyers are prepared to chase prices higher.
The precious metals are diverging; gold and platinum are consolidating but have managed to hold above recent lows, palladium prices are holding on to strong gains, while silver prices have fallen to levels last seen in February 2016. At these price levels on gold, investors may well see gold as a relatively cheap haven asset, should they need one.
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вторник, 4 сентября 2018 г.
METALS MORNING VIEW 04/09: Metals remain in consolidation mode
Three-month base metals prices on the London Metal Exchange were mixed this morning, Tuesday September 4, with price changes ranged between up by 0.7% for aluminium and down by 0.3% for nickel.
Copper and zinc prices were up by 0.2%, with the former at $5,959 per tonne, while lead and tin prices were off by 0.2%.
Volume has been low with 4,568 lots traded as at 06.28am London time.
Precious metals prices were for the most part little changed, with the exception of platinum where prices were up by 0.6% at $790 per oz. Gold prices were little changed at $1,200.60 per oz, silver prices were down 0.1% and palladium prices were up by 0.1%.
In China, the base metals prices on the Shanghai Futures Exchange were for the most part lower – the exception once again being lead, the October contract price of which was up by 0.6%. The others were weaker, led by a 1.2% decline in October zinc, while the rest were down by between 0.9% for November zinc and 0.4% for the most actively traded October copper contract, which was recently quoted at 47,980 yuan ($7,027) per tonne.
Spot copper prices in Changjiang were down by 0.2% at 48,160-48,260 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.04.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 0.1% at 482.50 yuan per tonne. On the SHFE, the January steel rebar contract was up by 0.7%, while the December gold and silver contracts were down by 0.3% and 0.4% respectively.
In wider markets, spot Brent crude oil prices are moving higher again and were recently quoted at $78.14 per barrel, up by 0.2% this morning. The yield on US 10-year treasuries was at 2.8638%, while the German 10-year bund yield was easier at 0.3318%.
Asian equity markets were mixed on Tuesday: Nikkei (-0.05%), the ASX 200 (-0.35%), Kospi (+0.31%), the Hang Seng (+0.28%) and the CSI 300 (+0.33%). This follows a slightly firmer performance in western markets on Monday, where in Europe the Euro Stoxx 50 closed up by 0.06% at 3,394.99, while US markets were closed for Labor Day.
The dollar index is rising again having rebounded on August 31 and was recently quoted at 95.20. The stronger dollar is once again putting downward pressure on metals prices. On the chart, the move above 95.66 on August 10 suggested the index had triggered a bullish Head-and-Shoulders Pattern, with a rebound now underway we wait to see if the index can climb back above that breakout level.
With the dollar stronger, the other major currencies we follow are for the most part consolidating: sterling (1.2865), the euro (1.1608), the yen (111.14), although the Australian dollar is firmer 0.7232
The yuan is slightly firmer and was recently quoted at 6.8205, but most of the emerging market currencies we follow are weakening. Although the problems in a number of the emerging markets are country-specific in the likes of Argentina, Turkey, South Africa and Brazil, there is a danger that these problems could cause nervousness across other emerging markets too.
The economic agenda is busy today, UK British Retail Consortium (BRC) increased 0.2%, which was lower than expected and Japan’s monetary base climbed 6.9%, which was better than expected. Data out later includes Spanish unemployment change, the United Kingdom’s construction purchasing managers’ index (PMI) and inflation report hearing, the European Union’s producer price index (PPI), as well as US data including final and ISM manufacturing PMIs, construction spending, ISM manufacturing prices, economic sentiment and total vehicle sales.
The rallies off the August lows in the base metals have for the most part halted and prices are consolidating. There are two exceptions – lead prices have been extending gains and nickel prices are extending losses. The underlying factors remain little changed, the metals are being jostled by the cross currents of uncertainty over trade disputes, a pick-up in post-summer physical interest, a stronger dollar and large presence of large short positions.
Overall, we do favor the upside from these levels, but the market may need to build more of a base before buyers are prepared to chase prices higher.
Palladium prices are rallying robustly, while the other precious metals are following the path of the base metals, which suggests they are also following the dollar and overall market sentiment.
The post METALS MORNING VIEW 04/09: Metals remain in consolidation mode appeared first on The Bullion Desk.
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