News

LME MORNING – Metals also hit in Chinese equity crash as investors flee risk

Date Aug 25 2015 10:03:18 Source:
Aug.25,2015(SHMET)--

Base metals fell victim to the mass sell-off in Chinese equities overnight that spooked investors and sent them flying from risky assets such as commodities.

 

Consequently, metal prices dropped to fresh multi-year lows, with the market looking increasingly vulnerable while sentiment worsens.

 

Stock markets in Asia continued to decline on Monday, with the Shanghai composite index shedding 8.49 percent to 3,209.905.

 

Expectations for monetary stimulus from the Peoples Bank of China (PBoC) over the weekend did not materialise, which made many to question the determination of Beijing to support the market, SP Angel said in a note.

 

Metals have largely ignored a stronger euro the single currency was last at 1.1470 against the dollar, having hit a six-month high earlier of 1.1499.

 

The data agenda is light today, with nothing to drive markets.

 

Copper slipped to a fresh July 2009 low of $4,927 per tonne, a $129 loss on Fridays close. Volumes have been robust more than 14,000 lots have changed hands on Select so far.

 

Despite support from the marginal cost curve, there remains downside pressure and risk to the copper price; a China stumble would likely cause sentiment to outpace whatever support the cost curve may support, Barclays Capital noted.

 

Stocks rose a net 2,375 tonnes to 356,200 tonnes, the highest since January 2014, due to arrivals in Busan and Singapore. Cancelled warrants jumped 10,175 tonnes due predominantly to increases in Asian locations the Singapore total climbed 3,825 tonnes, Johor 3,650 tonnes, Port Klang 1,350 tonnes and Busan 1,125 tonnes.

 

Despite the historically low prices, a backwardation remains in play all along the nearby curve cash/threes was at $8, cash/Sept at $0.50, cash/Oct at $1.00, Sept/Oct at $2.50, Sept/3-mth at $9, Oct/Nov at $5, Oct/3-mth at $7.25 and Nov/3-mth at $1.50.

 

Zinc had fallen to $1,709 its softest since June 2010 and last traded at $1,737, still down $29. Rising stocks did little to improve sentiment they jumped 17,300 tonnes to 522,750 tonnes, the highest since March 20.

 

Aluminium at $1,525 was at its softest since June 2009 and down $23. Stocks and cancelled warrants both fell 8,575 tonnes to 3,312,150 tonnes and 1,296,700 tonnes, respectively. The October and November date continued to show a backwardation, with Oct/Nov at $5 and Oct/3-mth at $5.40.

 

Nickel slumped to $9,655 but managed to hold above the $9,100 level it hit earlier this month. It was last at $9,680, a $520 loss. Stocks edged 60 tonnes higher to 455,052 tonnes and cancelled warrants fell 966 tonnes to 156,654 tonnes.

 

Lead at $1,647 was $55 lower, having hit $1,635 earlier, its lowest since June 2010. Inventories fell 2,075 tonnes to 192,650 tonnes.

 

Tin hit its softest since July 13 at $14,070 and was last at $14,500, still down $400. Stocks rose 235 tonnes to 7,590 tonnes and cancelled warrants increased 195 tonnes to 3,115 tonnes, a move centred on Singapore. Cash/threes remained in a backwardation at $105.

 

Steel, cobalt and molybdenum were neglected, with no changes to stocks.

 

Edited by SHMET

Caixin flash China manufacturing PMI hits 77-monthlow in August

Date Aug 24 2015 09:23:53 Source:
Aug.24,2015(SHMET)--

BEIJING -- The Caixin flash China general manufacturing PMI plunged to a 77-month low of 47.1 in August from 47.8 in July, suggesting continued downward pressure facing the world's second largest economy, a preliminary Caixin survey showed on Friday.

 

A reading above 50 indicates expansion, while a reading below that represents contraction.

 

The sub-index on manufacturing output retreated to a 45-month low of 46.6 in August from 47.1 in July, according to a survey by Caixin Media Co Ltd.

 

New orders and new export orders continued to decline at a faster rate in August, and employment dropped at a faster pace than in July, said the survey.

 

"The Caixin Flash China General Manufacturing PMI for August has fallen further from July's two-year low, indicating that the economy is still in the process of bottoming out," said He Fan, chief economist at Caixin Insight Group.

 

But overall, the likelihood of systemic risk remains under control and the structure of the economy is still improving, he added.

 

The flash index is published on a monthly basis ahead of final PMI data, making it the earliest available indicator of manufacturing conditions in China.

 

The estimate is based on approximately 85 to 90 percent of total PMI survey responses from over 420 manufacturing companies each month and is designed to provide an indication of the final PMI.

 

He said there is still pressure on maintaining growth rates, and to realize the goal set for this year the government needs to fine-tune fiscal and monetary policies to ensure macroeconomic stability and speed up structural reform.

 

China's economy, a key driver of global growth, expanded 7.4 percent last year, the weakest since 1990, and has slowed further this year, growing 7 percent in each of the first two quarters.

 

Newly released economic indicators also fell short of market expectations, revealing that the Chinese economy still lacks momentum and downward pressure remains.

 

China's value-added industrial output, which measures the final value of industrial production, expanded 6 percent year on year in July, down from 6.8 percent for June, the National Bureau of Statistics (NBS) said last Wednesday.

 

The decline in output growth ended a steady recovery trend recorded in the second quarter of this year.

 

Meanwhile, China's fixed-asset investment, a major driver of growth, also witnessed slightly slower growth in July, with no sign of improvement for investment in property and infrastructure, NBS data showed.

 

Since November, China has reduced benchmark interest rates four times and lowered the reserve requirement ratio (RRR) three times to stimulate the economy.

 

A research note from Minsheng Securities also suggested that China should take more pragmatic measures to stabilize growth, including further cuts to the RRR and more targeted measures to reduce long-term interest rates.

 

The final PMI for August will be released on Sept 1.

Edited by SHMET

Gold ticks higher amid fragile US equity markets

Date Aug 24 2015 09:20:05 Source:
Aug.24,2015(SHMET)--

 

Gold prices closed higher for the fourth session this week as equity markets hit fresh lows, prompting safe haven buying.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange rose $6.40 to settle at $1,159.60 per ounce.

 

The yellow-metal finished in positive territory four out of five sessions this week as today’s trading session ranged from $1,148.50 to $1,167.90.

 

The S&P index fell below 2,000 today, the lowest point since February as equity markets collapsed worldwide. The Dow Jones industrial average was last down 1.9 percent to 16,670.10.

 

“Equities remain under pressure…in the last five years these sort of pressures have presented the ideal entry points for the wealth management side,” the group added.

 

Gold typically acts as a safe haven – or a hedge – for investors during volatile periods or uncertainty in global markets.

 

Inflows in gold ETF holdings accelerated – holdings in funds tracked by FastMarkets have increased to 1,526.70 tonnes.

 

Turning to global news, rancorous disputes in Greece over an additional bailout and further austerity measures has forced Greek Prime Minister Alexis Tsipras to resign as he called for a snap election next month.

 

In China, Caixin – previously HSBC – flash manufacturing PMI undershot expectations at 47.1 – below the 50 contraction level. It was the lowest reading since March 2009 and follows the previous poor reading of 48.2.

 

EU flash manufacturing and flash service PMI data was as expected at 52.4 and 54.3, respectively. EU consumer confidence was also in-line with forecasts at -7.

 

US Flash Manufacturing PMI in August was 52.9, below the consensus of 53.9.

 

The weakening dollar – last 1.1 percent softer $1.1359 against the euro – and falling oil prices were also market news.

 

Light sweet crude (WTI) oil prices on the Nymex were down $1.23 or three percent to $40.09 per barrel. Earlier, the price slipped under $40 per barrel, the lowest price since 2009.

 

As for the other precious metals, Comex silver for September delivery was last down 20.7 cents at $15.310 per ounce. Trade has ranged from $15.105 to $15.715.

 

Platinum for October delivery on the Nymex declined $8.90 to $1,026.0 per ounce, while the most-actively traded palladium contract was at $603.40 per ounce, down $19.85.

 

 

 

Edited by SHMET

Gold acts as safe haven as global equities plummet

Date Aug 24 2015 09:19:49 Source:
Aug.24,2015(SHMET)--

Gold prices advanced to fresh highs as the three major equity markets spiraled downward, attracting safe haven demand for the yellow-metal.

 

Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $2.70 or 0.2 percent to $1,155.90 per ounce, near six week highs for the precious metal. Trade has ranged from $1,148.50 to $1,167.90.

 

Overnight, the Shanghai Composite Index fell 4.3 percent to 3,507.74, while Germany’s DAX and France’s CAC-40 were each down 1.3 percent respectively.

 

Turning to the US, the Dow Jones industrial average and S&P were each down 2.1 percent, while the dollar was 0.6 percent softer $1.1305 against the euro.

 

Gold typically acts as a safe haven – or a hedge – for investors during volatile periods or uncertainty in global markets.

 

Inflows in gold ETF holdings accelerated – holdings in funds tracked by FastMarkets have increased to 1,526.70 tonnes.

 

“Those who began singing the swan song for gold around four weeks ago are doubtless rubbing their eyes in amazement now,” Commerzbank said. “It would appear that the precious metal is not quite so useless after all when things get turbulent on the markets. After all, equity markets are now nose-diving not only in China, but worldwide.”

 

In news, rancorous disputes in Greece over an additional bailout and further austerity measures has forced Greek Prime Minister Alexis Tsipras to resign as he called for a snap election next month.

 

In China, Caixin – previously HSBC – flash manufacturing PMI undershot expectations at 47.1 – below the 50 contraction level. It was the lowest reading since March 2009 and follows the previous poor reading of 48.2.

 

The economic data is focused on flash PMI numbers today – already released EU flash manufacturing and flash service PMI data was as expected at 52.4 and 54.3, respectively.

 

The US also has flash manufacturing PMI scheduled.

 

As for the other precious metals, Comex silver for September delivery was last down 9.7 cents at $15.420 per ounce. Trade has ranged from $15.300 to $15.715.

 

Platinum for October delivery on the Nymex declined $4.70 to $1,030.20 per ounce, while the most-actively traded palladium contract was at $606.10 per ounce, down $17.15.

Edited by SHMET

Gold price holds on to gains on safe-haven demand, room for rallies

Date Aug 24 2015 09:19:34 Source:
Aug.24,2015(SHMET)--

The gold price held on to its highest level in more than a month on Friday, boosted by a weakening Chinese economy and a softer US dollar.

 

The spot gold price was last at $1,150.5/1,150.9, down $4.40 on the previous close, but around its highest in more than a month.

 

Trade has ranged from $1,150.3 to $1,168.4 – its highest since July 7 – so far.

 

“Gold prices are leading a broad based rally in the precious metals driven by safe-haven demand, but in turn that is likely to be fuelled by short-covering,” William Adams, FastMarkets head of research, said.

 

“As the fund gross short positions have become large there may well be room for considerable rallies,” he added.

 

The advance in gold prices was largely driven by the dovish Federal Reserve July meeting minutes and as traders scaled back their views on a US interest rate rise in September.

 

According to the Fed Fund Future, a rate hike in September has been virtually priced out, and a rate hike by year’s end is regarded as only 75 percent probable.

 

“It would appear that the yellow precious metal is not quite so useless after all when things get turbulent on the markets,” Commerzbank noted.

 

Still the bank warned investors not to get too carried away.

 

“We would warn against assuming that prices will continue to perform as they have done in recent days, however,” it said. “If interest rate expectations were to shift again, gold could come under renewed pressure,” it added.

 

Overnight, Caixin – previously HSBC – flash manufacturing PMI undershot expectations at 47.1 – below the 50 contraction level. It was the lowest reading since March 2009.

 

Equities are in retreat once again this morning as Chinese data added to concerns about global economic growth.

 

“Investors looking to rotate out of strong markets may well look for oversold asset classes, such as gold, to park their profits while corrections are underway,” Adams noted.

 

The dollar index is falling as well – it was last at 95.55.

 

Elsewhere, the Greek Prime Minister Alexis Tsipras resigned and called for a snap election in September.

 

The economic data is focused on flash PMI numbers today – already released EU flash manufacturing and flash service PMI data was as expected at 52.4 and 54.3, respectively. The US also has flash manufacturing PMI scheduled.

 

Meanwhile, inflows in gold ETF holdings accelerated – holdings in funds tracked by FastMarkets have increased to 1,526.70 tonnes.

 

As for the other precious metals, silver was little changed at $15.37/15.42. Platinum at $1,021/1,026 fell $10 and palladium at $601/606 was down $20.

Edited by SHMET
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