LIVE FUTURES REPORT 27/09: SHFE copper, aluminium prices decline after sentiment deteriorates

Base metals prices on the Shanghai Futures Exchange were mixed during the morning trading session on Friday September 27, with the complex continuing to be pushed and pulled by a firm dollar and signs of easing tensions between China and the United States.

Positivity stemming from US President Donald Trump saying earlier this week that a trade deal with China could come sooner than people think proved short-lived after political turmoil in the US and renewed trade concerns caused sentiment to deteriorate.

“The market isn’t clear on what to make of the latest impeachment developments in the US, and this continues to increase uncertainty and could be weighing on investor sentiment,” Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note.

Reports the US is unlikely to renew a temporary waiver that allows American companies to do business with Chinese telecommunications giant Huawei added to the risk-off tone pervading markets, with the move putting a dampener on the growing positivity surrounding US-China trade relations.

At the same time, the dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, continues to hover near a two-year high. The index was at 99.20 as at 10:15 am Shanghai time, after reaching a high of 99.28 earlier in the day.

Against such a backdrop, SHFE base metals exhibited mixed movements on Friday morning, with copper and aluminium giving the worst performances of the complex.

Copper led the decline, with the red metal’s most-traded November contract falling to 46,790 yuan ($6,561) per tonne as at 10.15am Shanghai time, down by 330 yuan per tonne - 0.7% - from Thursday’s close of 47,120 yuan per tonne.

Aluminium was similarly weak. The light metal’s most-traded November contract slid by 90 yuan per tonne - or 0.6% - to 13,950 yuan per tonne as at 10.15am Shanghai time compared with Thursday’s close of 14,040 yuan per tonne.

A slower-than-expected drawdown in stocks in China is also affecting sentiment in the aluminium market, which is causing more and more funds to withdraw from the market, and this is pressuring prices lower as a result, an aluminium analyst at Guotai Junan said.

Other highlights

  • In US data on Thursday, the country’s final gross domestic product figure on a quarter-on-quarter basis was in line with expectations with a 2% increase. Pending home sales were better-than-expected with a 1.6% increase to 107.3 in August, versus the expected 1% decline.
  • In US data today, durable goods orders, personal spending, the PCE price index and revised University of Michigan consumer sentiment and inflation expectations are of note.
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