- Asian-Pacific equities and pre-market major western equity index futures were mixed following another down day in US equities on Thursday.
- Oil prices were holding in low ground with Brent crude at $39.91 per barrel, Tuesday’s low being $39.32 per barrel.
Three-month base metals prices on the London Metal Exchange were mixed this morning, with the complex down by an average of 0.2%. The main movers were nickel ($14,685 per tonne) and tin ($17,835 per tonne) that were both down by 0.8%, while the rest were little changed, with copper up by 0.1% at $6,637.50 per tonne.
The most-traded base metals contracts on the Shanghai Futures Exchange were for the most part lower; the exception was October aluminium that was up by 0.3%, while October zinc was only off by 0.1% and the rest were down between 1.1% for October copper that was recently quoted at 51,480 yuan ($7,526) per tonne and 1.7% for November tin.
The spot gold price was down by 0.4% at $1,938.54 per oz and has remained choppy as we have been expecting - so far this week it has fallen to $1,906.65 per oz, rebounded to $1,966.40 per oz and is now mid-range. Spot silver was down by 0.9% at $26.63 per oz, palladium was down by 0.5% at $2,288.20 per oz and platinum was up by 0.3% at $926.50 per oz.
The yield on US 10-year treasuries was recently quoted at 0.68%, this after 0.69% at a similar time on Thursday.
Asian-Pacific equities were mixed this morning: the CSI 300 (+0.26%), the Hang Seng (+0.54%), the Nikkei (+0.59%), the Kospi (-0.38%) and the ASX 200 (-0.61%).
The dollar index was consolidating this morning and was recently quoted at 93.27 – the range so far in September being 91.73-93.66.
The European Central Bank’s reference to the euro at yesterday’s meetings did give the euro a brief boost; it climbed to 1.1917 from 1.1827 at a similar time on Thursday, but was last at 1.1835. It does seem to be edging higher again this morning, however.
Sterling (1.828) remains on the back foot with the government’s course on its Brexit deal driving sentiment, while the yen (106.174) and the Australian dollar (0.7278) were little changed.
Friday is a busy day for data - see table below for more details. Key data includes German consumer prices (CPI), Italian quarterly unemployment rate, while from the United Kingdom there is data on gross domestic product, index of services, construction output, manufacturing and industrial output and consumer inflation expectations.
US data includes CPI and the Federal budget, while there is also the possibility that data China’s new loans and M2 money supply will be released.
In addition, Germany’s Bundesbank president Jens Weidmann is scheduled to speak.
Today’s key themes and views
With Thursday’s US tech rebound faltering yesterday afternoon, the notion that dip-buying had already stopped the correction in its track may be a bit premature. Indeed, the base metals showed some reluctance to rally on Thursday morning and on the charts prices still seem to be rolling over to the downside, led by declines in zinc, lead and nickel.
Overall, we would not be surprised to see dips extend further across markets, including the base metals, but then given prospects for earlier infrastructure spending announcements to turn into actual orders as time passes, we would expect the upward trends in metals to resume.
Gold prices remain rangebound for now and are undergoing an extended period of consolidation. Expect more choppy trading for now as if we see further risk-off that may shake out some of the weaker longs, before we see more rotation out of equities into havens.