Base metals recovered on Friday mainly on the back of a strong rebound in nickel and some recovery in aluminium and zinc. On average the gains were 0.8 percent with nickel up 3.2 percent in price to $16,660, aluminium up 0.8 percent at $1,920, although copper was unchanged at $6,642.50. Good US employment data helped sentiment.
This morning the base metals are mixed but trading has been quiet with China still on holiday, the first day of trading for the Shanghai Futures Exchange will be Wednesday. The copper price is up 0.3 percent at $1,188.40, aluminium is flat at $1,920 and zinc is up 0.3 percent at $2,276.25, while nickel has pulled back 0.5 percent to a price of $16,583. Volumes have been light with 932 lots traded.
Equities shrugged off the weakness seen earlier last week with the strong US employment report leading to a 0.9 percent gain in the Euro Stoxx 50 and the Dow closed up 1.2 percent. In Asia this morning, the Nikkei is up 1.5 percent, the Hang Seng is up 0.5 percent, but the Kospi is off 0.3 percent.
Currencies – the dollar index is strong at 86.59, the euro dropped to 1.2516 on Friday on the back of the diverging trends between the US economy and Europe’s, sterling dropped to 1.5985, the aussie is rebounding off Friday’s low, it is last at 0.8692, the yen remains weak at 109.55 and emerging currencies are generally weak too.
The economic agenda is focused on Europe today with German factory orders, EU retail PMI, EU Sentix Investor Confidence and UK housing equity withdrawals – see table below for more details.
The weakness continued to wash through the base metals last week, but the lower levels were attracting some bargain hunting as seen by the underlying tails on the candlesticks. There have been bouts of buying seen all the way along the downward trends so we wait to see if this is any different. With China’s and Europe’s growth weakening, we doubt whether a strong US economy on its own will be enough to underpin the metals, but for those metals looking set to tighten next year, scale down buying is likely to be not too far away and may already be creeping into the likes of nickel and tin – although it is too early to say that with any confidence. On balance, we would not be surprised to see some buying emerge ahead of China’s return from its week long holiday on Wednesday.
|Average (BM ex-Steel)||0.0%||932|
|7:00am||Germany||German Factory Orders m/m||-2.4%||4.6%|
|9:30am||EU||Sentix Investor Confidence||-11.8||-9.8|
|9:30am||UK||Housing Equity Withdrawal q/q||-11.3B||-12.2B|