Base metals closed down an average of 0.2 percent yesterday with metals quite mixed with nickel closing down 1.7 percent at $9,835, aluminium and tin were off 0.4 percent, copper was unchanged at $4,627 and lead and zinc were up around 0.6 percent. Precious metals were mixed yesterday with gold prices ending the day down 0.3 percent at $1,321.70, having bounced off $1,318 support, silver closed unchanged at $18.55, platinum was off 0.5 percent and palladium was up 0.9 percent.
This morning, the base metals are up across the board and quite uniformly with gains of between 0.4 and 0.7 percent, with copper up 0.5 percent at $4,650 – about where it was this time yesterday. Volume has been almost double what it has been this week, 9,843 lots have traded, the bulk being in zinc that has seen volume of 5,891 lots. Zinc prices have so far today ranged between $2,327.50, a fresh high, and $2,290 – last at 2,310.
In China, the base metals are up an average of 0.4 percent, lead is off 0.1 percent, nickel is down 0.7 percent, the rest are higher, led by a 2.7 percent gain in zinc. Tin is unchanged, aluminium is up 0.5 percent and the copper is up 0.3 percent at Rmb 36,450. Spot copper in Changjiang is up 0.2 percent at Rmb 36,310-36,430, giving a small contango. The LME/Shanghai copper arbitrage ratio is wider again at 7.84, this may start to open the window for imports.
In other metals in China, iron ore prices have fallen for a second day, prices are down 1.6 percent, steel rebar is off 1.1 percent, gold prices are down 0.1 percent and silver is up 0.1 percent. In international markets, Brent crude is last at $49.44.
Equities were weaker yesterday as the market consolidated ahead of Fed Chair Janet Yellen’s speech at the Jackson Hole symposium. The Euro Stoxx 50 closed off 0.7 percent and the Dow ended off 0.2 percent. Asia is mixed this morning – the Nikkei is down one percent, the Hang Seng is up 0.5 percent, the CSI 300 is up 0.2 percent, the ASX 200 is down 0.5 percent and the Kospi is off 0.3 percent.
In FX, the dollar index is weaker at 94.56, the euro is trying to edge higher, last at 1.1304, as is the aussie at 0.7638, sterling is flat at 1.3214 as is the yen at 100.44. In emerging market currencies the yuan is weaker at 6.6768 and the other currencies we follow are mixed, with a slightly weaker bias.
The economic agenda is busy, with Japanese CPI, German GfK consumer climate, EU money supply and private loans, UK GDP estimates, business investment and index of services. US data includes GDP, goods trade balance and University of Michigan consumer sentiment and inflation expectations. Fed Chair Janet Yellen is speaking at 3pm BST.
Copper and nickel have recently led the retreat in the base metals complex but copper’s price slide halted yesterday at a low of $4,620 and nickel set a low of $9,810. The other metals followed copper to varying degrees but did not look as committed to sell-off and most have rebounded with some vigour to the extent that zinc has broken higher to set a fresh high for the year. We have viewed these pullbacks as consolidation and zinc has now signalled its intention to continue higher, as tin did on Wednesday. The market may well be nervous ahead of the Fed Chair’s speech today, but if anything we expect a dovish message, which may well weaken the dollar and give the metals a boost.
Gold prices followed silver lower on Wednesday and weakened further yesterday, but prices found support around $1,318, which is the support line underpinning recent lows. Silver is consolidating in low ground but continues to look vulnerable, platinum also looks vulnerable, while palladium is holding up well. Given it is platinum that is likely to be most affected by any strike action in South Africa, we are surprised by platinum’s relative weakness to palladium in recent weeks. Generally as we are not expected a hawkish message from the Jackson Hole meeting, we would not be surprised if gold prices found buying at these lower levels.
| Overnight Performance | ||||
| BST | 06:56 | +/- | +/- % | Lots |
| Cu | 4650 | 22.5 | 0.5% | 2209 |
| Al | 1651.5 | 7.5 | 0.5% | 662 |
| Ni | 9900 | 65 | 0.7% | 828 |
| Zn | 2310 | 13.5 | 0.6% | 5891 |
| Pb | 1875 | 8 | 0.4% | 235 |
| Sn | 18795 | 70 | 0.4% | 18 |
| Average | 0.5% | 9,843 | ||
| Gold | 1324.49 | 2.79 | 0.2% | |
| Silver | 18.638 | 0.088 | 0.5% | |
| Platinum | 1077.1 | 7.1 | 0.7% | |
| Palladium | 694.4 | 9.4 | 1.4% | |
| Average PM | 0.7% | |||
| SHFE Prices 06:57 BST | RMB | Change | % Change |
| Cu | 36450 | 120 | 0.3% |
| AL | 12395 | 60 | 0.5% |
| Zn | 17925 | 465 | 2.7% |
| Pb | 13935 | -15 | -0.1% |
| Ni | 78530 | -560 | -0.7% |
| Sn | 124060 | -10 | 0.0% |
| Average change (base metals) | 0 | 0.4% | |
| Rebar | 2534 | -29 | -1.1% |
| Au | 284.85 | -0.35 | -0.1% |
| Ag | 4152 | 3 | 0.1% |
| Economic Agenda | |||||
| BST | Country | Data | Actual | Expected | Previous |
| 12:30am | Japan | Tokyo Core CPI y/y | -0.4% | -0.3% | -0.4% |
| 12:30am | Japan | National Core CPI y/y | -0.5% | -0.4% | -0.5% |
| 6:00am | Japan | BOJ Core CPI y/y | 0.5% | 0.8% | |
| 7:00am | Germany | GfK German Consumer Climate | 10.2 | 10.2 | 10.0 |
| 9:00am | EU | M3 Money Supply y/y | 5.0% | 5.0% | |
| 9:00am | EU | Private Loans y/y | 1.8% | 1.7% | |
| 9:30am | UK | Second Estimate GDP q/q | 0.6% | 0.6% | |
| 9:30am | UK | Prelim Business Investment q/q | -0.9% | -0.6% | |
| 9:30am | UK | Index of Services 3m/3m | 0.4% | 0.3% | |
| 1:30pm | US | Prelim GDP q/q | 1.1% | 1.2% | |
| 1:30pm | US | Goods Trade Balance | -62.3B | -63.3B | |
| 1:30pm | US | Prelim GDP Price Index q/q | 2.2% | 2.2% | |
| 3:00pm | US | Fed Chair Yellen Speaks | |||
| 3:00pm | US | Revised UoM Consumer Sentiment | 90.6 | 90.4 | |
| 3:00pm | US | Revised UoM Inflation Expectations | 2.5% | ||
| All Day | ALL | Jackson Hole Symposium | |||
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