- A better-than-expected US employment report on Friday led to a strong close for the base metals at the end of last week, but a weaker tone in equity markets may now be a headwind.
- China’s import data was weaker than expected with imports down by 2.1% year on year in August, but exports were better than expected, rising by 9.5%.
Three-month base metals prices on the LME were little changed this morning with prices ranged between down by 0.2% for nickel ($15,305 per tonne) and up by 0.3% for lead ($1,983.50 per tonne). Copper was down by $1 per tonne at $6,779.50 per tonne, this after a 3% rise on Friday. Indeed, the base metals complex closed up by an average of 1.4% on Friday.
Trading volume has, however, been light with 4,000 lots traded as of 5.50am London time, this compares with an average of 6,013 lots at a similar time across Tuesday to Friday last week.
The most-traded base metals contracts on the SHFE were up by an average of 0.8%, with only October zinc weaker, it was down by 0.3%. October copper led on the upside with a 2.2% rally to 52,520 yuan ($7,674) per tonne.
The spot precious metals were firmer across the board this morning; gold was up by 0.1% at $1,935.06 per oz, silver ($27.06 per oz) was up by 0.6%, platinum ($95.50 per oz) was up by 0.1% and palladium ($2,315.40 per oz) was up by 0.6%.
The yield on US 10-year treasuries has jumped and was recently quoted at 0.72%, this after 0.64% at a similar time on Friday.
Asian-Pacific equities were mixed this morning: the CSI 300 (-0.62%), the Hang Seng (-0.09%), the Nikkei (-0.43%), the Kospi (+0.54%), and the ASX 200 (+0.15%).
The dollar index is consolidating this morning; it was recently quoted at 92.90, this after 92.77 at a similar time on Thursday.
With the dollar off rebound highs, the other main currencies were off recent lows this morning, albeit on a back foot: the euro (1.1831), the Australian dollar (0.7283), the yen (106.27) and sterling (1.3222).
Data out already on Monday showed China’s surplus was $58.9 billion in August, compared with $62.3 billion in July. Japan’s leading indicators climbed to 86.9%, from 83.8%.
Data out later includes German industrial production, the United Kingdom’s Halifax house price index and the European Union’s Sentix investor confidence.
Today’s key themes and views
Friday’s strong performance underpinned the base metals complex and put on hold the earlier signs of the metals looking toppy. This was especially true for copper, with follow-through strength earlier this morning taking prices to within $10 per tonne of this year’s high of $6,830 per tonne. But with equities looking a bit jittery after last week’s tech weakness, the metals may struggle on the upside. With US markets closed for Labor Day, trading may be thin and choppy today.
Gold prices are rangebound for now but seem to be struggling to hold on to gains, but equally there seems to be support in the $1,900-1,920 per oz area. If broader markets do suffer further profit-taking then we would expect that to affect gold too, but once the money is realized from profit-taking in broader markets it may then rotate into gold, so the secondary reaction to a sell-off in broader markets may be bullish for gold.