понедельник, 31 декабря 2018 г.
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воскресенье, 16 декабря 2018 г.
суббота, 15 декабря 2018 г.
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среда, 12 декабря 2018 г.
вторник, 11 декабря 2018 г.
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воскресенье, 9 декабря 2018 г.
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среда, 5 декабря 2018 г.
METALS MORNING VIEW 05/12: Metal prices consolidate while broader markets show weakness
Three-month base metals prices on the London Metal Exchange were mixed in the morning of Wednesday December 5, with zinc and copper up by 0.4% and 0.3% respectively, while the rest of the complex was little changed or weaker.
This follows a volatile day in markets on Tuesday, when the base metals were mixed, but when US equity markets were hit hard by nervousness over the flattening of the yield curve, which has inverted in some places.
Volume across the complex has been above average with 5,947 lots traded as at 7:20am London time.
The precious metals were weaker on Wednesday. Gold fell by 0.3% to $1,234.50 per oz recently while palladium was 0.5% lower. Silver was off 0.7%.
In China this morning, January contract prices for base metals on the Shanghai Futures Exchange were mixed, with copper off by 1.2% at 49,330 yuan ($7,186) per tonne, nickel off by 0.8% and aluminium off by 0.5%, while the rest were up between 0.2% for tin and 0.5% for lead.
Spot copper prices in Changjiang were down by 0.9% at 49,350-49,630 yuan per tonne and the LME/Shanghai copper arbitrage ratio was firmer at 7.97, compared with 7.91 on Tuesday, this suggests Chinese copper prices have not pulled back to the same extent as LME copper prices.
In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was up by 2.5% at 477.50 yuan per tonne. On the SHFE, the May steel rebar contract was up by 3.9%. The fact these basic building block metals and ore prices are strengthening bodes well and suggests yesterday’s weakness was more to do with the yield curve rather than President Donald Trump’s tweets on trade.
In wider markets, spot Brent crude oil prices were easier, off by 0.2% $61.10 per barrel – the recent low being $57.52 per barrel. The yield on US 10-year treasuries was weaker and has dropped below the 3% level to 2.9109% and the yield on the US 2-year and 5-year treasuries were at 2.7988% and 2.7870% respectively. The German 10-year bund yield has dropped to 0.2600%. The weaker yields suggest investors expect the US Federal Reserve to slow the pace of interest rate rises, but the inverted yield curve is seen as a warning that an economic slowdown may be on the way.
Asian equity markets on Tuesday have followed the US markets lower: the Nikkei (-0.53%), the CSI 300 (-0.48%), the ASX 200 (-0.78%), the Kospi (-0.62%) and the Hang Seng (-1.59%).
This follows extremely weak performances in US markets on Tuesday, where the Dow Jones closed down by 3.1% at 25,027.07, while in Europe, the Euro Stoxx 50 was down by 0.8% at 3,189.25.
The dollar index spiked lower to 96.37 on Tuesday, but closed at 96.95 and was recently quoted at 97.11 – the stronger dollar and weaker US Treasury yields do not go hand-in-hand, suggesting the dollar was up for safe-haven reasons, and yesterday’s stronger yen (113.02) would support that view. The euro is consolidating around 1.3333, while the Australian dollar (0.7297) and sterling (1.2710) are weaker.
The rebound in the yuan has halted for now with the currency recently quoted at 6.8661 – this suggests confidence in the trade developments. The other emerging market currencies we follow are for the most part on a back footing, suggesting risk-off.
In data already out on Wednesday, China’s Caixin Services purchasing managers index (PMI) rebounded to 53.8 from 50.8 previously, later there is data on Spanish, Italian, French, German, European Union and United Kingdom services PMI, EU retail sales and the US beige book. In addition, European Central Bank Mario Draghi is speaking.
Copper prices have been the hardest hit by in recent days. Having spiked up to $6,352 per tonne on Monday on the trade news that came out of the G20 meeting, the selling has returned and prices are back in mid-ground. The other metals have done better at holding on to their gains following the trade developments, which suggests they may be being more reflective of what the trade deal means. It may be that copper has been the hardest hit as Comex copper was open yesterday evening when the Dow Jones was under pressure. Given the trade truce and the tightening fundamentals, we still expect a gradual switch to a “glass half full” outlook, from the “glass half empty” one we have held since June.
Gold prices have pulled back from Tuesday’s highs but the uptrend seems intact. With the US treasury yields falling we expect the dollar to head lower and that in turn is expected to support a firmer gold price.
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METALS MORNING VIEW 04/12: Metals prices rebound again after Monday’s rally ran into selling
Price gains inspired by the trade developments at the Group of Twenty (G20) summit over the weekend were sold into during afternoon trading on Monday December 3, but likewise the dips have been bought into again this morning.
Three-month base metals prices on the London Metal Exchange were up by an average of 0.5% on Tuesday morning, with all of the metals – bar nickel which was unchanged – in positive territory.
The fact the post-G20 reaction has not led to a huge spike higher means the uptrend may be more sustainable, especially as the dip has been bought into.
Volume across the complex has been above average with 7,536 lots traded as at 7.44am London time.
The precious metals were also stronger this morning with gains averaging 0.4%, helped by a weaker dollar and a stronger crude oil price.
In China this morning, the January contract prices for base metals on the Shanghai Futures Exchange were mixed, with copper off by 0.7% at 49,660 yuan ($7,193) per tonne and lead off by 0.3%, while the rest were up between 0.1% for aluminium and 1.1% for zinc.
Spot copper prices in Changjiang were down by 1.1% at 49,850-50,040 yuan per tonne and the LME/Shanghai copper arbitrage ratio was weaker at 7.91, compared with 7.94 on Monday – suggesting the LME is leading the stronger tone.
In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was up by 1.8% at 472 yuan per tonne. On the SHFE, the June steel rebar contract was up by 1.3%.
In wider markets, spot Brent crude oil prices were stronger, up by 0.73% $62.32 per barrel – the recent low being $57.52 per barrel. The yield on US 10-year treasuries was weaker and has dropped below the 3% level to 2.9561%, while the German 10-year bund yield has dropped to 0.2980%. The weaker yields suggest investors expect the US Federal Reserve to slow the pace of interest rate rises.
The enthusiasm seen in Asian equity markets on Monday has faded – the CSI 300 was up 0.21% on Tuesday, but the other indices we follow were lower: the Nikkei (-2.39%), the ASX 200 (-1.01%), the Kospi (-0.82%) and the Hang Seng (-0.03%).
This follows strong performances in western markets on Monday; in the United States, the Dow Jones closed up by 1.13% at 25,826.43, while in Europe, the Euro Stoxx 50 was up by 1.32% at 3,214.99.
The dollar index is weakening, with weaker US Treasury yields no doubt weighing on sentiment – the index was recently quoted at 96.69. The other major currencies we follow are for the most part firmer: euro (1.1391), the Australian dollar (0.7382) and the yen (113.06), while sterling (1.2765) is consolidating.
The yuan has continued to rebound and was recently quoted at 6.8400 – this suggests confidence in the trade developments. The other emerging market currencies we follow are mixed, suggesting a degree of uncertainty, although the ringgit is stronger, probably reflecting the stronger oil price.
In data already out on Tuesday, Spanish unemployment fell for the first time since July in November, declining by 0.06% from a month earlier. Later, we have data on UK construction spending, the EU’s producer price index, there is an EU Economic and Financial Affairs Council meeting and data on US economic optimism. In addition, Bank of England governor Mark Carney, US Federal Open Market Committee (FOMC) member John Williams and UK Monetary Policy Committee member Gertan Vlieghe are speaking.
Despite the selling that capped Monday’s price spikes, the fact buying has been seen again this morning is encouraging and suggests sentiment has turned more positive. The JP Morgan global manufacturing purchasing managers’ index (PMI) held at 52.0 in November, suggesting the global economy is still expanding – albeit weakly – but this might now pick-up as the trade threat eases. We now wait to see if there is further follow-through buying on the back of the metals’ fundamentals. On balance, we expect a gradual switch to a ‘glass half full’ outlook, from the ‘glass half empty’ – one we have been in since June.
Gold prices are on the climb again and are a few dollars away from breaking above the October highs at $1,243.45 per oz. A weaker dollar and an escalation in US/Iran tensions, following Iran’s test-firing of a medium-range ballistic missile, are providing support. Silver is following gold’s lead, platinum remains weak, while at the other end of the spectrum, palladium prices remain strong having set fresh record highs on Monday.
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METALS MORNING VIEW 03/12: Metals react positively to G20 trade developments
Some progress at the Group of Twenty (G20) summit on US-China trade has given the three-month base metals prices on the London Metal Exchange a boost, up by an average of 1.4%.
The LME zinc price gained 1%, while copper was up 1.9% and recently quoted at $6,314 per tonne. Volume across the complex has, not surprisingly, been strong with 14,686 lots traded as at 6:53am London time.
The precious metals were stronger too with gains averaging 1.1%, helped by a weaker dollar and reports that Qatar is to leave Opec, which, combined with the trade developments, has led to a 5% bounce in crude oil prices.
In China this morning, the January contract prices for base metals were stronger by an average of 1.9%; led by a 3.4% rise in zinc, while copper was up 1.1% at 50,120 yuan ($7,266) per tonne.
Spot copper prices in Changjiang were up by 1.5% at 50,310-50,700 yuan per tonne and the LME/Shanghai copper arbitrage ratio was weaker at 7.94, suggesting the LME is leading the stronger tone.
In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was up by 1.9% at 463 yuan per tonne. On the SHFE, the June steel rebar contract was up by 1.2%.
In wider markets, spot Brent crude oil prices had jumped by 5.06% this morning, to $62.09 per barrel – the recent low being $57.52 per barrel. The yield on US 10-year treasuries was firmer at 3.0447%, as was the German 10-year bund yield at 0.3400%, suggesting less risk-on in the markets.
Asian equity markets have reacted strongly to G20 developments with prices higher on Monday: the Nikkei (1.0%), the ASX 200 (1.84%), the Kospi (1.67%), the Hang Seng (2.40%) and the CSI 300 (2.77%).
This follows mixed performances in western markets on Friday; in the United States, the Dow Jones closed up by 0.79% at 25,538.46, while in Europe, the Euro Stoxx 50 was off slightly by 0.3% at 3,173.13.
The dollar index is weakening, but remains in mid-range and was recently quoted at 96.79. The other major currencies are for the most part firmer: euro (1.1376), the Australian dollar (0.7375) and sterling (1.2787), but the yen is weaker at 113.51, again suggesting a degree of risk-on.
The yuan has jumped and was recently quoted at 6.8906, while the other emerging market currencies we follow are mixed, most are firmer or little changed, while the rupee is weaker.
The economic agenda is busy with the release of manufacturing purchasing managers’ index (PMI) data, which is out across all regions. Japan’s reading came in at 52.2, up from a previous reading of 51.8 and China’s 50.2 just beat the 50.1 that was expected. Hopefully the respite in the trade war will help fuel an economic rebound in China and prevent the PMI slipping below the 50 level which would imply the economy is contracting. Other data that is out later includes US construction spending, US ISM manufacturing prices and US total vehicle sales.
In addition Federal Open Market Committee (FOMC) member Richard Clarida is speaking three times, and FOMC member Lael Brainard and UK Monetary policy committee member Andrew Haldane are also speaking.
The G20 developments have seen the base metals prices gap higher, key will now be what follow-through action there is. Indeed, the developments have removed the immediate fear of the negative situation escalating which should give the global economy and commodities time to reflect their fundamentals again, which we think should be bullish.
For now, with the global economy receiving a boost, the rising tide is lifting all the metals we follow and rising oil prices should also be bullish for gold/commodity prices, especially if investors start to get interested in buying into commodity baskets.
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METALS MORNING VIEW 30/11: Base metals prices firm despite disappointing China data
Three-month base metals prices on the London Metal Exchange were firm on the morning of Friday November 30 despite the release of weaker-than-expected economic data from China earlier in the day.
The three-month tin price led the gains with a 0.6% increase to $18,620 per tonne and was closely followed by zinc and nickel, which were both up by 0.4%. Copper and lead managed to eke out mild gains of 0.2%, with the former at $6,215 per tonne, while aluminium was unchanged. Still, overall sentiment in the LME base metals was fairly positive with prices up by an average of 0.3%.
With November drawing to an end and investors focusing on the weekend’s Group of Twenty (G20) summit in Argentina, trading volumes have been low this morning – only 3,012 lots had been traded across the LME three-month base metals as at 6.26am London time.
In the precious metals, demand for haven assets remains fairly muted despite the softer dollar of late. Gold and silver prices were unchanged at $1,224 and $14.30 per oz respectively, but platinum continues to underperform with a drop of 0.4% to $815.10 per oz.
Conversely, platinum’s sister-metal palladium recorded a fresh record high of $1,191 per oz earlier this morning – it was recently at $1,118.40 per oz.
In China, most of the January contract prices for base metals on the Shanghai Futures Exchange were up – the exceptions being aluminium and tin with falls of 0.7% and 0.1% respectively. Nickel and zinc recorded solid gains of 1.8% and 1.5% respectively, while copper and lead were more subdued with respective increases of 0.2% and 0.1%. On average, base metals prices on the SHFE were up by 0.5%.
Spot copper prices in Changjiang were a tad weaker, down by 0.1% to 49,760-49,800 yuan ($7,164-7,170) per tonne and the LME/Shanghai copper arbitrage ratio was at 7.96.
In other metals in China, the most-traded January steel rebar contract on the SHFE was off by 1.8%, while the SHFE June contracts for gold and silver were up a modest 0.4% and 0.3% respectively. The January iron ore contract on the Dalian Commodity Exchange (ZCE) edged up 5 yuan per tonne to 479 yuan per tonne.
In wider markets, spot Brent crude oil has attracted some bargain-buying near $60.00 per barrel this morning. In the bond market, US 10-year treasuries were slightly weaker, down by 0.07% at 3.0248 and similarly, the German 10-year bund yield was off by 0.36% at 0.3200.
The recent recovery in the US equity market has started to stall after it closed on a negative note on Thursday. Traders turned cautious amid fresh concerns that growth in the US economy has started to show signs of peaking. Sentiment was overshadowed by October’s weaker-than-expected pending home sales data. That said, Asian equity indexes were mostly higher this morning and largely ignored the overnight release of the negative Chinese economic data: Nikkei (0.4%), Topix (0.48%), Hang Seng (0.47%) and China CSI 300 (1.12%).
Following the sell-off on Wednesday, the dollar index has started to stabilize at 96.82. The other major currencies we follow were a tad weaker: the Australian dollar (0.7313), the euro (1.1384) and Sterling (1.2779).
It has been a busy start in terms of economic releases, with data already out showing China’s manufacturing and non-manufacturing purchasing managers’ index (PMI) data coming in well below market expectations at 50.0 and 53.4 respectively. In Japan, consumer confidence dipped to 42.9, from 43.0 previously and house starts were weaker than forecast at 0.3%. German data was mixed with the import price index for October up by 1%, beating an expected rise of 0.4%, while retail sales for the same month were down by 0.3% – against an expected 0.4% increase.
Later, we have the European Union’s headline and core flash consumer price index (CPI) and the Chicago PMI from the US. In addition, US Federal Open Market Committee member John Williams is due to speak.
The uncertainty surrounding this weekend’s G20 summit continues to dominate market focus. While base metals prices were largely up this morning, gains have been limited and should remain so until more direction emerges from G20 meetings. That said, any resolution from the summit would allow the base metals, which are generally in low ground, to stage an end-of-year rally, we feel. This is because a lot of the selling has run its course and a potential ceasefire or some type of framework to end the trade dispute between China and the US would likely attract pent-up demand from consumers looking to restock.
The precious metals, meanwhile, remain relatively quiet, though any tough rhetoric from either US President Donald Trump or his Chinese counterpart is likely to spark demand for haven assets. That said, platinum continues to struggle against the threat of US tariffs on automobile imports.
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METALS MORNING VIEW 29/11: Metals prices consolidate gains after Fed comments, focus shifts to G20
Three-month base metals prices on the London Metal Exchange were being pushed and pulled by cross currents this morning, Thursday November 29. Nickel, lead and tin showed gains averaging 0.4%, while copper, aluminium and zinc were down by an average of 0.4%. Copper was off by 0.4% at $6,230 per tonne.
Volume across the complex has been average with 5,189 lots traded as at 7.33am London time.
Wednesday’s more dovish tone from US Federal Reserve chairman Jerome Powell, saying that the central bank may soon be in a position to pause the interest rate hikes, had boosted confidence in the base metals market. As a result, base metals prices on the LME closed up with average gains of 1.4% on Wednesday, while equites rebounded, yields fell and the dollar weakened.
With the dollar weaker, the precious metals were for the most part firmer this morning; gold, silver and platinum prices were up by an average of 0.5%, with gold at $1,226.80 per oz, while palladium prices were consolidating.
The market is looking more confident this morning due to Wednesday’s Federal Reserve comments, but likewise it is still nervous about what developments there will be on trade at this weekend’s Group of Twenty (G20) summit, and so trade issues are likely to dominate for the rest of the week.
In China this morning, most of the January contract prices for base metals were firmer; led by a 1.2% rise in copper to 49,550 yuan ($7,124) per tonne, zinc, lead and nickel were up by an average of 0.7%, while aluminium and tin prices were down by 0.2%.
Spot copper prices in Changjiang were up by 1.3% at 49,670-49,860 yuan per tonne and the LME/Shanghai copper arbitrage ratio was weaker at 7.95 after 7.99 on Wednesday, suggesting the LME is leading the stronger tone.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 1.3% at 476 yuan per tonne. On the SHFE, the January steel rebar contract was off by 0.2%.
In wider markets, spot Brent crude oil prices were firmer this morning, up by 1.01% at $59.16 per barrel – the recent low being $58.42 per barrel. The yield on US 10-year treasuries was considerably weaker at 3.0180%, while the German 10-year bund yield was also weaker at 0.3355%.
Asian equity markets were mixed on Thursday: the Nikkei (0.39%), the ASX 200 (0.58%), the Kospi (0.28%), the Hang Seng (-0.92%) and the CSI 300 (-1.3%).
This follows stronger performances in western markets on Wednesday; in the United States, the Dow Jones closed up by 2.5% at 25,366.43, while in Europe, the Euro Stoxx 50 was up by 0.06% at 3,168.29. Powell’s comments came too late in the day to impact European equities, plus the European auto sector will still be concerned over whether President Donald Trump will impose a 25% tariff on imported vehicles.
The dollar index is weakening on the back of the Federal Reserve comments and was recently quoted at 96.65 – we wait to see if the comments turn out to be a trend changer for the dollar. Needless to say the other major currencies are firmer following the comments: yen (113.28), euro (1.1394), the Australian dollar (0.7330) and sterling (1.2831).
The yuan remains in low ground and was recently quoted at 6.9435, while the other emerging market currencies we follow are firmer due to the weaker dollar.
The economic agenda is busy – data already out shows French gross domestic product (GDP) growth unchanged at 0.4% and Spanish consumer price index (CPI) at 1.7%. Later there is data on German unemployment, UK lending and US releases that include personal income, spending and prices, initial jobless claims, pending home sales and natural gas storage. In addition, European Central Bank President Mario Draghi is speaking and this evening the latest US Federal Open Market Committee (FOMC) meeting minutes are released.
Wednesday saw the base metals gain some momentum which has boosted lead, aluminium, zinc and tin off recent lows, while nickel prices remain around the lows and copper is looking the best to try to break higher. Copper does, however, face considerable resistance on the charts between $6,296 and $6,394 per tonne – so with the uncertainty surrounding G20, we expect the upside will remained capped until the outcome of G20 is known.
Gold, like copper, is well placed to push higher and if there is follow-through enthusiasm about Powell’s comments then a weaker dollar could underpin a stronger gold price. Silver looks set to follow gold’s lead, while the platinum group metals may hold back as the auto market may be about to face stronger headwinds from tariffs.
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METALS MORNING VIEW 01/10: Mixed start to trading in low-volume market
In the precious metals this morning, spot gold prices were off by 0.3% at $1,189.00 per oz, palladium prices were off by 0.5%, while silver prices were little changed and platinum prices were up by 0.3%. This follows a general day of strength last Friday that saw gold, silver and platinum prices rise by an average of 1.3%, while palladium prices eased by 0.8%.
Silver was the star performer last Friday with prices putting in a strong performance – given the size of the gross short fund position there may well be further room for short-covering now that prices appear to have put in a base. The gold/silver ratio was recently at 1:81.4, having been out at 1:85 in recent weeks.
Three-month base metals prices on the London Metal Exchange were for the most part firmer, the exception being copper where prices were down by 0.4% at $6,233 per tonne. The rest were up between little changed for aluminium and 0.9% for lead.
With Chinese markets closed for the Golden Week holiday to mark the country’s National Day, volume has been light with 1,606 lots traded as at 07:12am London time.
This follows a day of general strength last Friday when the complex closed up by an average of 1.2%, led by a 3.3% rise in zinc prices.
In wider markets, spot Brent crude oil prices were higher by 0.41% and were recently quoted at $83.18 per barrel while the market gets nervous about whether other oil producers will be able to fill the gap caused by continuing US pressure on countries to rein in their imports of Iranian oil. The yield on US 10-year treasuries has firmed to 3.0715%, having been as high as 3.1% September 26. The German 10-year bund yield has firmed and was recently quoted at 0.4810%.
Asian equity markets were mixed on Monday with the Nikkei up by 0.52%, taking it to the highest since 1991, while the ASX 200 is down 0.57% and the Kospi is off 0.18%. This follows a mixed performance in western markets on Friday; in the United States, the Dow Jones closed up by 0.07% at 26,458.31, while in Europe, the Euro Stoxx 50 was down by 1.47% at 3,399.20 – the latter dragged down by concerns over Italy’s budget plans.
The dollar index continues to react favorably to the US rate rise with a move up to 95.25 and has done a good job in negating the weakness seen over the past six weeks or so.
With the dollar stronger and Europe facing issues on Brexit and Italy’s budget, the euro (1.1586) and sterling (1.3030) are weaker, as are the yen (113.95) and the Australian dollar (0.7207) is consolidating.
The emerging currencies we follow are for the most part consolidating; the exception is the Mexican peso that is stronger on the back of the new trilateral trade deal between the US, Mexico and Canada.
The economic agenda is extremely busy on Monday, with Tankan and purchasing managers’ index (PMI) data already out in Japan coming in weaker than previous readings. Later there is manufacturing PMI data out across Europe and the US, as well as data on German retail sales, Italian unemployment, UK lending, US construction spending and total vehicle sales. There is also a Eurogroup meeting and US Federal Open Market Committee member Raphael Bostic is speaking.
The base metals prices are looking quite diverse; zinc is the latest to break higher, while copper and nickel consolidate after their upside breaks on September 21. Lead seems to be mustering the energy to follow zinc, while aluminium and tin remain rangebound. With China on holiday this week, lower liquidity is likely to lead to choppy prices, but the trade deal between the US, Mexico and Canada is a positive development and that may instill some hope that other deals will follow.
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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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