• Pre-market major western equity index futures were down either side of one percent.
  • The Nikkei and ASX 200 were down by 0.6% and 1.4% respectively.
  • Will base metals prices follow equities lower?

Base metals
Three-month base metals prices on the LME were for the most part weaker this morning; the exceptions were nickel that was up by 0.3% at $14,340 per tonne and tin that was untraded. The rest were down by an average of 0.2%, led by a 0.8% fall in zinc ($2,302.50 per tonne) while copper was down by 0.2% at $6,331.50 per tonne.

Volumes traded on the LME were higher than expected given the Gold Week holiday in China, with 3,246 lots traded by 5.51am London time, compared with 1,554 lots at a similar time on Thursday.

Precious metals

The precious metals were mainly weaker this morning, with spot gold off by 0.1% at $1,904.62 per oz, but prices have started to rebound since the news about Trump broke; gold was as low as $1,889.70 per oz earlier this morning. Spot silver was up by 0.3% at $23.88 per oz, platinum was down by 0.4% at $893.50 per oz and palladium was down by 0.3% at $2,317 per oz.

Wider markets
The yield on US 10-year treasuries has pulled back again. It was recently quoted at 0.66%, this compared with 0.7% at a similar time on Thursday.

The Asian-Pacific equities that are open were weaker: the ASX 200 (-1.39%) and Nikkei (-0.78%).

The US dollar index was pulling back after last week’s show of strength, but it has started to move higher on the Trump news, along with other havens, such as gold, the Japanese yen and US treasury yields. It was recently quoted at 93.88 after Thursday’s low of 93.52.

Most of the other major currencies have turned lower as the dollar has rebounded: the euro (1.1715), the Australian dollar (0.7142) and sterling (1.2861), but the yen (105.11) has firmed.

Key data
Friday is a busy day for economic data releases and the focus will be on the US employment report. Data already out showed Japan’s unemployment rate edge up to 3% in August, from 2.9% in July and its monetary base grew by 14.3% year on year in September, up from 11.5% in August.
Later there is data on Japan’s consumer confidence, Spanish unemployment change, European Union consumer prices and in addition to the US employment report there is US data on factory orders, revised University of Michigan data on consumer sentiment and inflation expectations.

In addition, Federal Open Market Committee member Patrick Harker is scheduled to speak.

Today’s key themes and views
The base metals on the LME accelerated lower on Thursday, which is in line with our overall view that there may be more weakness on stale long liquidation before physical buying strengthens on a pick-up in infrastructure orders as and when planning stages move toward construction.

With equities now heading lower on the Trump news, the metals may suffer more risk-off while profits from the March- September rallies are locked in.

Gold prices were already getting some lift off last week’s low and now may get a boost while greater uncertainty in an already uncertain climate increases haven demand further.