The rising uncertainty follows a ratcheting up of tensions in the Middle East at the end of last week, while market participants eagerly await any developments on the US-China trade war from a planned meeting between the two countries’ presidents at the Group of Twenty (G20) summit in Japan this coming Friday and Saturday.
At the end of last week, US President Donald Trump aborted a retaliatory attack on Iran following the downing of US drone on June 20, but tensions were raised further when Trump announced on Saturday plans to impose major new sanctions on Iran.
Adding to the market uneasiness at the start of the week was the uncertain direction that US-China relations may take ahead of a meeting between Chinese President Xi Jinping and his US counterpart at the G20 summit in Osaka, Japan.
But the base metals continued to find support from the growing expectations of an interest rate cut by the US Federal Reserve in the near term, fueled by increasingly dovish language from the central bank over the past week.
“A tentative start to the week as the market feels uncertain about what narrative it should run with. A considerable volume of ink was spilt on Sunday regarding Iran, the dovish FOMC remains ingrained on the market’s mind, while the G-20 looms,” Stephen Innes, managing partner of Vanguard Markets, said in a morning note.
“The markets have opened with slight risk-off posturing, and those who remained hedged over the weekend will be keen to see where Sunday’s Iran news flow leads before even thinking about reversing,” Innes added.
Against such a mixed backdrop, base metals prices on the SHFE were mixed as at 10.13am Shanghai time this morning; August nickel, zinc and aluminium were up by 0.6%, 0.4% and 0.2% respectively, August lead was up by 0.1%, August copper was unchanged at 46,650 yuan ($6,790) per tonne and September tin bucked the downtrend with a 0.3% gain.
Other highlights
- The dollar index was down by 0.06% at 96.16 as at 11.38 am Shanghai time.
- The Shanghai Composite Index dip by 0.09% at 2,999.3 as at 11.39 am Shanghai time.
- It is a light day for data on Monday with only Germany’s Ifo business climate reading of note.
