Edited by SHMET
Precious metals were mixed yesterday with platinum lower by 0.6 percent while silver was up 0.6 percent and gold and palladium were up 0.2 percent with gold prices at $1,087. The base metals closes up an average of 0.5 percent yesterday, with all the metals firmer except tin that was off 1.8 percent. Lead jumped the most with a 2.1 percent rise and copper closed up 0.6 percent at $5,221.
This morning the base metals are for the most part slightly weaker with copper off 0.5 percent at $5,194.50, tin is bucking the trend with a 0.3 percent rebound, while the rest are off between 0.1 and 0.3 percent. Volume is light at 2,879 lots.
In Shanghai, the base metals are mixed, lead is up 1.1 percent, tin is off 0.9 percent and zinc is up 0.4 percent, while the rest are off 0.1 percent, with copper at Rmb 37,940. Spot copper in Changjiang is up 0.1 percent at Rmb 38,400-38,550, the backwardation is at an equivalent of $98 per tonne and the LME/Shanghai copper arb ratio is 7.41 for nearby dates, which means the arb window is probably just open to some traders.
Gold and silver are down 0.3 percent in Shanghai, steel rebar is unchanged at Rmb 2,085, while elsewhere iron ore is around $55 and Brent crude oil is around $50.40.
Equities in Europe and the US remained weaker yesterday with the Euro Stoxx 50 down 0.4 percent and the Dow off 0.3 percent and Asia this morning is mixed with China’s CSI 300 down two percent, while the Nikkei is up 0.6 percent, the Hang Seng is up 0.2 percent and the Kospi is up 0.1 percent.
Currencies – the dollar remains upbeat with the dollar index at 98.06, most lately boosted by comments from FOMC member Dennis Lockhart that he feels September will be an “appropriate time” for the Fed to raise rates. Other currencies are weaker with the euro at 1.0864, sterling at 1.5536, the yen at 124.37 and the aussie at 0.7353, after a peak of 0.7428. The rouble has strengthened from recent weakness, last at 62.53. IMF staff have reportedl. said that the IMF should put off any move to add the yuan to its currency basket until after September 2016, the IMF is scheduled to make a decision in November – the yuan is little changed at 6.2093.
The economic agenda is busy, the focus is on final services PMI that is out across China, Europe and the US. Data out already shows China’s Caixin Services PMI climbed to 53.8 from 51.8 – so at least China’s measures to transform the economy from an export based one to a consumer driven one seems to be making headway. In addition, there is data on Italian industrial production, EU retail sales and US data includes the ADP non-farm employment change, the trade balance and cude oil inventories – see table below for more details.
The precious metals are holding in low ground just above recent lows – the latest firmness in the dollar does not seem to have been a catalyst for another push lower, at least not yet. Gold prices are likely to be waiting for this week’s US jobs data, which is likely to be the next pointer as to when the Fed makes its first move. The markets therefore remain vulnerable to both the upside and downside, the path of least resistance is to the downside, but should prices find reason to rally, then the extended gross fund short position could prompt short-covering.
Base metals have found some lift off Monday’s lows, especially lead. The exception being tin that is seeing some consolidation after a strong rebound. The markets are therefore vulnerable as the downward trends dominate, but many metals seem oversold, especially those that are likely to see supply tighten in the months ahead, notably nickel, zinc and lead. In the short term, copper is suffering some supply disruptions, which could well provide some lift to prices, as could the open arb window between LME and Shanghai. So although we are not bullish per se, we would not be surprised to see prices get some lift that in turn could prompt short-covering.
BST 06:32:09 +/- +/- % Lots
Cu 5194.5 -26.5 -0.5% 1342
Al 1615 -1 -0.1% 133
Ni 10805 -35 -0.3% 503
Zn 1919 1 0.1% 555
Pb 1732.5 -3.5 -0.2% 336
Sn 15750 50 0.3% 10
Steel 300 0 0.0% Total
Average (BM ex-Steel) -0.1% 2879
Gold 1086.9 -0.1 0.0%
Silver 14.54 -0.01 -0.1%
Platinum 947 -6 -0.6%
Palladium 595.9 -0.1 0.0%
Average PM -0.2%
SHFE Prices 6:39 BST Change % Change
Cu 37940 -30 -0.1%
AL 12095 -15 -0.1%
Zn 14695 65 0.4%
Pb 12905 145 1.1%
Ni 80430 -70 -0.1%
Sn 107460 -940 -0.9%
Average change (base metals) 236.5 0.1%
Rebar 2085 0 0.0%
Au 218.65 -0.6 -0.3%
Ag 3197 -11 -0.3%
BST Country Data ACTUAL Expected Previous
12:01am UK BRC Shop Price Index y/y -1.4% -1.3%
2:45am China Caixin Services PMI 53.8 52.2 51.8
8:15am Spain Spanish Services PMI 55.8 56.1
8:45am Italy Italian Services PMI 53.2 53.4
8:50am France French Final Services PMI 52.1 52
8:55am Germany German Final Services PMI 53.7 53.7
9:00am EU Final Services PMI 53.8 53.8
9:00am Italy Italian Industrial Production m/m -0.2% 0.9%
9:30am UK Services PMI 58.1 58.5
10:00am EU Retail Sales m/m -0.1% 0.2%
1:15pm US ADP Non-Farm Employment Change 216K 237K
1:30pm US Trade Balance -42.8B -41.9B
2:45pm US Final Services PMI 55.2 55.2
3:00pm US ISM Non-Manufacturing PMI 56.3 56
3:30pm US Crude Oil Inventories -1.3M -4.2M