MORNING VIEW: Base metals prices mainly stronger helped by Monday’s stronger manufacturing data

Base metals prices on both the London Metal Exchange and Shanghai Futures Exchange were mainly stronger this morning, Tuesday November 3, after markets were encouraged by generally robust manufacturing purchasing managers’ index (PMI) data that came out on Monday.

  • Regardless of who wins the US presidential election, the markets expects the liquidity pumps to remain switched on…
  • …which is supporting asset classes

Base metals
Three-month base metals prices on the LME were for the most part firmer this morning, the exception was aluminium that was down by 0.3% at $1,864.50 per tonne, while the rest were up by between 0.5% for copper ($6,806 per tonne) and tin ($17,980 per tonne) that was up by 0.8%.

The most-traded base metals contracts on the SHFE were also generally firmer, the exception being December nickel that was down by 0.6%, while the rest of the complex were up between 0.8% for both December aluminium and December lead and 1.4% gains in December zinc and January tin. December copper was up by 1.2% at 51,660 yuan ($7,716) per tonne.

Precious metals
The precious metals complex was mixed with spot gold and silver bullion prices weaker, while the platinum group metals were firmer. Gold prices were up by 0.2% at $1,891.12 per oz.

Wider markets

The yield on US 10-year treasuries has slipped slightly and was recently quoted at 0.84%, this after 0.86% at a similar time on Monday.

Asia-Pacific equities were stronger this morning: the ASX 200 (+1.93%), the CSI (+1.05%), the Hang Seng (+2.31%), the Nikkei (closed) and the Kospi (+1.88%).

Currencies
The US dollar index was consolidating recent gains this morning and was recently quoted at 93.95, this after 94.16 at a similar time on Monday.

With the dollar pausing, the other major currencies were slightly firmer after recent weakness: the yen (104.71), the Australian dollar (0.7041), the euro (1.1659) and sterling (1.2927).

Key data
Economic data scheduled to be released on Tuesday is focused on the United States with data on factory orders, economic optimism and total vehicle sales.

Today’s key themes and views
Asset classes in general seem to be focused on the likelihood of increased liquidity especially while the pandemic spreads further and wider, especially in Europe and the US. In addition, the base metals seem to be well underpinned by the prospects for stronger demand from infrastructure spending.

Gold prices are stuck in a sideways range. Over the long run we remain bullish, but are prepared for increased volatility around the US presidential election, especially if the result is contested.


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