• Chinese equities under pressure again today – market worried about regulatory intervention
  • Pre-market western equity index futures showing a weaker start again

Base metals
LME three-month base metals prices were down across the board this morning by an average of 0.5%, but this followed a generally strong performance on Monday, when the complex started on a back foot, but ended the day with gains averaging 0.9%, with a 2.4% rally in copper. At 6.49am this morning, London time, copper was down by 0.4% at $9,820 per tonne.

Volume on the LME was also elevated at 10,199 lots, compared with an average last week of around 6,150 lots at a similar time of day.

The most-active base metals contracts on the SHFE were mixed this morning. September copper was up 2.3% at 72,180 yuan ($11,129) per tonne, August lead was down by 0.9% and September tin was down by 0.3%, while the rest were up by an average of 0.3%.

Precious metals
Spot gold prices were down by 0.1% at $1,796.46 per oz this morning, silver was up by 0.3% at $25.23 per oz, platinum was down by 0.2% at $1,064 per oz and palladium was down by 0.3% at $2,647 per oz.

Wider markets
The yield on US 10-year treasuries was at 1.28% this morning, up from 1.24% at a similar time on Monday.

Asia-Pacific equities were mixed on Tuesday: the Nikkei (+0.49%), the Kospi (+0.23%), the Hang Seng (-2.54%), the ASX 200 (0.5%) and the CSI 300 (-1.96%).

Currencies

The US Dollar Index was recently at 92.66, slightly weaker than the 92.88 where it was at a similar time on Monday.

The major currencies were slightly firmer, with most consolidating within recent ranges: the Australian dollar (0.7369), the euro (1.1792) and the Japanese yen (110.15), while sterling (1.3821) was rebounding from last week’s sell-off that saw a low of 1.3570.

Key data
Economic data already out on Tuesday showed Japan's services producer price index rise by 1.4% year on year in June, after a 1.5% rise in May.

Later there is key data on EU M3 money supply and private loans, United Kingdom realized sales and US data on durable goods orders, house prices, consumer confidence and the Richmond manufacturing index.

In addition, the US Federal Open Market Committee starts a two-day meeting.

Today’s key themes and views

We have been watching copper in recent weeks because it had been in a vulnerable position on the charts, but the recent rally has now taken it off the vulnerable list and it now looks as though prices are on course to challenge the highs again. Zinc and nickel are following copper’s lead, aluminium is still consolidating in high ground, while tin has continued to push the envelope on the upside and lead has shown strength too. All in all, the metals are looking bullish again, which fits our underlying supercycle theme.

With equities looking fragile, US 10-year treasuries relatively weak and with other metals on the rise, it is surprising gold is not firmer. Gold prices lost upward momentum last week and do not yet seem to be getting much support from the weakness in Asian equities.

The next Morning View report will be published on Monday August 2.