MORNING VIEW: Base metals prices mixed, while broader markets buoyant

Base metals prices on the London Metal Exchange were mainly weaker this morning, Monday February 8, while those on the Shanghai Futures Exchange were mostly firmer, but this comes after a strong performance on the LME on Friday, when prices closed up by an average of 1.7%.

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Base metals
The LME three-month aluminium price was up by 0.3% at $2,024.50 per tonne this morning and tin ($23,140 per tonne) was unchanged, while the rest of the complex was down by an average of 0.4%, led by a 0.9% fall in zinc ($2,661 per tonne). Copper was off by 0.1% at $7,977.50 per tonne.

The most-traded base metals contracts on the SHFE were for the most part stronger, the exception was March lead that was down by 0.5%, while the rest were up by an average of 1.1%, led by a 1.5% rise in April nickel. March copper was up by 1.3% at 58,680 yuan ($9,073) per tonne.

Precious metals
Precious metals were up across the board by an average of 0.7%, but this was skewed by a 2% rise in platinum to $1,145 per oz. Silver was up by 0.6% at $27.05 per oz, with gold and palladium both up by 0.1% at $1,815.58 per oz and $2,351.80 per oz respectively.

Wider markets
The yield on US 10-year treasuries has continued to push higher and was recently quoted at 1.18% this morning, up from 1.13% at a similar time on Friday, indicating a pick-up in risk appetite.

Asian-Pacific equities were mainly stronger this morning: the Hang Seng (+0.3%), the CSI (+1.34%), the ASX 200 (+0.59%) and the Nikkei (+2.12%), while the Kospi (-0.94%) was weaker.

The US Dollar Index was consolidating this morning around 91.10, after pulling back on Friday to 90.98, having earlier on Friday been at 91.60.

Most of the other major currencies were consolidating after Friday’s rebound gains: the euro (1.2033), the yen (105.52), the Australian dollar (0.7674) and sterling (1.3731).

Key data
Data already out on Monday showed Japan’s economic watchers sentiment index drop to 31.5 in January, from 35.5 in December, and Germany’s industrial production was flat in December, after climbing by 1.5% month on month in November.

Out later, there is reading of investor confidence in the European Union by Sentix.

Today’s key themes and views
Despite being weaker this morning, the base metals are looking more upbeat again after last week’s rebounds and we now need to see whether there is follow-through buying to push prices out of their sideways-to-down trends that have contained prices for varying lengths of time.

But it may be that this latest upside run is on the back of last minute restocking ahead of the Chinese Lunar New Year holiday. Yet with broader markets upbeat too, the base metals’ rallies may have further to run.

The sell-off in gold and silver has attracted some dip-buying, but the real standout is platinum that has gapped higher his morning.

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