• While the metals were higher, Asian equities were for the most part under pressure this morning
  • US 10-year treasury yields remains firm, as too does the US Dollar Index

Base metals
The LME three-month base metals prices were up across the board with gains averaging 1% this morning, led by a 2.1% rise in copper to $8,590 per tonne – the highest it has been since April 2012. Copper, aluminium, nickel and tin prices have all set fresh multi-year highs this morning and volume has been high with 19,517 lots traded as of 7am London time. The high volume, highlighting the return of Chinese traders after the Lunar New Year holiday.

The most-traded base metals contracts on the SHFE were also up across the board, but by an average of 4% – led by 5.6% and 5.1% gains in April tin and April copper respectively, with the latter at 63,310 yuan ($9,799) per tonne. May steel rebar was up by 3.3% and the May iron ore contract on the Dalian Commodity Exchange was up by an impressive 7%.

Precious metals
After two down days, spot gold prices were consolidating this morning and were up by 0.2% at $1,780.91 per oz, this after Wednesday’s low of $1,770 per oz. Silver was down by 0.9% at $27.14 per oz, platinum continues to correct after its recent surge, prices were down by 1.1% at $1,258.50 per oz, while palladium was consolidating and was little changed at $2,378.90 per oz.

Wider markets
The yield on US 10-year treasuries was off from Wednesday’s high, but remains elevated this morning and was recently quoted at 1.28%, up from 1.21% at a similar time on Monday.

Asian-Pacific equities were mainly weaker this morning: the Nikkei (-0.19%), the Kospi (-1.5%), the Hang Seng (-1.37%), the CSI 300 (-0.63%), while the ASX 200 (+.01%) was little changed

Currencies
The US Dollar Index continues to rebound and was recently quoted at 90.89, compared with 90.77 at a similar time on Wednesday and after a low of 90.12 on Tuesday.

The other major currencies were mixed this morning: the euro (1.2046) and sterling (1.3865) were weaker, the Australian dollar (0.7756) was consolidating and the yen (1o5.84) was firmer.

Key data
Thursday’s data is mainly focused on the United States. Releases include the Philly Fed manufacturing index, housing starts, building permits, import prices, initial jobless claims, crude oil inventories and natural gas storage. There is also data on consumer confidence in the European Union.

In addition, UK Monetary Policy Committee member Michael Saunders and US Federal Open Market Committee (FOMC) member Lael Brainard are scheduled to speak and the European Central Bank will releases its monetary policy meeting accounts.

Today’s key themes and views
After pausing and consolidating between December and January, copper, aluminium, lead and zinc have all embarked on another up leg, while tin and nickel hardly stopped to pause over the winter.

The underlying theme remains bullish on the back of economic recovery and infrastructure spending and we think this is part of a much bigger electrification-charged super-cycle. We should expect dips along the way, but expect they will end up being good buying opportunities.

Gold prices are under pressure on the back of the stronger yield and US dollar, which combined with strong performances in other asset classes means the opportunity cost of hold gold has risen. But given more talk of inflation, we expect gold will follow the overall direction of the industrial metals and oil.