• Brent crude oil continues to rally, reaching $71.71 on Thursday morning.
  • China’s Caixin services purchasing manager’s index eases to 55.1 in May, from 56.3 in April.

Base metals
LME three-month base metals prices were generally weaker this morning, with the exception of nickel ($18,305 per tonne) and aluminium ($2,436.50 per tonne) which were up by 0.5% and 0.1% respectively. The rest were down by an average of 0.5%, led by a 0.8% decline in tin ($30,200 per tonne). Copper was off by 0.3% at $10,080 per tonne.

The most-active SHFE base metals contracts showed similar trends, with July nickel reporting a 1.7% gain, and an average fall of 0.7% for the rest. This was led by a 1.4% fall in June copper to 72,920 yuan ($11,413) per tonne.

Precious metals

Spot precious metals were slightly firmer this morning with gains averaging 0.2%. Spot gold was up by 20 cents per oz at $1,908.44 per oz.

Wider markets
The yield on US 10-year treasuries dropped to 1.59% after reaching a high of around 1.64% on Tuesday.

Asia Pacific equities were mixed on Thursday: the Nikkei (+0.39%), the ASX 200 (+0.59%), the Kospi (+0.72%), the Hang Seng (-0.6%) and the CSI 300 (-0.18%).


The dollar index seems to have been bouncing along the bottom over the past week and was recently at 90.08, after lows of 89.66 on Tuesday and 89.53 on May 25.

With the dollar consolidating, there was little changed in the other major currencies from a similar time on Wednesday: sterling (1.4145), the Australian dollar (0.7726), the yen (109.80) and the euro (1.2187).

Key data
Thursday’s economic agenda is busy, with services purchasing managers index (PMI) data out across China, Europe and the United States.
There is US data on challenge job cuts, ADP non-farm employment change, initial jobless claims, revised non-farm productivity and unit labor costs, natural gas storage and crude oil inventories

Bank of England governor Andrew Bailey and Federal Open Market Committee members Raphael Bostic and Randal Quarles are scheduled to speak.

Today’s key themes and views

The rebounds in copper and aluminium have once again run out of steam and the metals are starting to look slightly top heavy, but the rest of the metals seem to be consolidating. If the two heavyweights of the complex - copper and aluminium - retreat further, they are likely to drag the others down too.

We continue to be long-term bullish on a lockdown recovery, infrastructure spending and supply disruption from delayed shipping and potential strikes. The metals are vulnerable to profit-taking should broader markets get nervous about central bank tightening. Today and Friday’s US employment data is likely to be closely scrutinized.

We think gold will remain strong despite prices pausing for now, due to the inflationary backdrop and potential for increased volatility in markets.

That said, when broad market corrections unfold, gold’s initial reaction is often negative, while investors look to raise cash for margin calls, with the secondary reaction then bullish.