LME MORNING – Metals lower while awaiting US data, copper around $5,100/t

Base metals were in negative territory in Friday’s LME premarket – the recent rally failed to attract-follow through buying, market participants said.

As well, many investors remain on the sidelines ahead of the release of the blockbuster US jobs report later this afternoon. Volumes are low as well while China is absent for national holidays.

“The pullback yesterday after Wednesday’s rally raises a warning flag that the rally may have just been end-of-quarter window dressing – we wait to see if the targeted stimulus measures China has taken in the property and auto sectors feed through to the metals,” FastMarkets head of research William Adams said.

Trading conditions may become volatile today depending on the outcome of US jobs data and what it could mean for the timing of the Federal Reserve’s possible interest-rate increase, Triland noted.

Non-farm payrolls in August sank to 173,000, the first sub-200,000 reading since April. Current estimates are for the US to have added 202,000 non-farm jobs in September. Yesterday, the latest weekly jobless claims came in at 277,000.

Various Federal Open Market Committee (FOMC) members including Federal Reserve chairwoman Janet Yellen have yet to rule out a rate rise this month, adding importance to today’s release.

Still, market participants currently see the probability of an October increase at 14 percent, according to the CME Group FedWatch – a tool to gauge the market’s view of a change in US monetary policy.

Data out of Japan overnight was mixed. Although the unemployment rate ticked up to 3.4 percent – it had been forecast to remain steady at 3.3 percent – household spending jumped to 2.9 percent from -0.2 percent last month, far exceeding the predicted 0.4 percent.

The picture was bleaker in the eurozone – the Spanish unemployment change at 26,100 was worse than the expected 17,900 and the previous reading of 21,700 while the region-wide PPI at -0.8 percent was worse than the expected -0.5 percent and the downwardly revised previous reading of -0.2 percent.

The euro was last a quarter of a cent weaker against the dollar at 1.1166. Other US data due today includes average hourly earnings, the unemployment rate and factory orders.

In the metals, copper recently traded at $5,094 per tonne, down $3 on Thursday’s close. In yesterday’s session it peaked at $5,230. Around 3,000 lots have changed hands on Select so far.

In today’s warehouse data, stocks slipped a net 975 tonnes to 319,425 tonnes and cancelled warrants dropped 2,475 tonnes to 75,250 tonnes.

Aluminium at $1,562 was $4 lower- it fell just short of $1,600 yesterday. Stocks and cancelled warrants were both down 7,700 to 3,171,525 and 1,048,625 respectively.

Nickel was last at $10,030, a drop of $45. It peaked at $10,595 yesterday. Inventories climbed 612 tonnes to 453,246 tonnes and cancelled warrants fell 216 tonnes to 207,564 tonnes.

Zinc dropped $13 to $1,674. Stocks and cancelled warrants both fell 1,100 tonnes to 594,925 tonnes and 61,775 tonnes respectively.

Lead at $1,636 was also down $13, with stocks and cancelled warrants both falling 825 tonnes to 161,600 tonnes and 41,425 tonnes respectively.

Tin was unchanged at $15,525 and steel, cobalt and molybdenum were neglected.

(Additional reporting by Kathleen Retourne and Dalton Barker, editing by Mark Shaw)