MORNING VIEW: Base metals firm in Shanghai, mixed in London
- United States President Joe Biden signs $ 1 trillion infrastructure deal …
- … which should be good for metals as it focuses on upgrading roads, bridges and broadband networks
Three-month base metals prices at the LME were mixed on Friday, with the main drivers being tin, which was down 1.1% to $ 30,415 per tonne, while aluminum was up 0. 5% to $ 2,451 per tonne and nickel up 0.6% to $ 18,555 per tonne. Copper ($ 9,455.50 per tonne), zinc ($ 2,919 per tonne) and lead ($ 2,215.50 per tonne) were little changed.
The most active Shanghai Futures Exchange base metals contracts rose 1.1% on average, led by a 3.3% rise in nickel in August, which offset the 0.1% gain August copper, at 69,060 yuan ($ 10,689). per ton.
Spot precious metals were also up across all areas, with gold up 0.2% to $ 1,779.70 an ounce, while more industrial precious metals were up 0.8% in average.
The yield on 10-year US Treasuries was 1.49% this morning, unchanged from the same time on Thursday.
Asia-Pacific stocks were up sharply across the board on Friday – the Nikkei was + 0.61%, CSI 300 + 1.7%, ASX 200 + 0.53%, Kospi + 0.42% and the Hang Seng + 1.34%.
Last week’s rebound in the US dollar index has ended and it was recently at 91.76, little change from Thursday, after peaking last week at 92.41 on June 18.
Major currencies consolidated this morning: British Pound (1.3925), Australian Dollar (0.7593), Euro (1.1941) and Japanese Yen (110.86).
Data already released on Friday showed Tokyo’s consumer price index (CPI) held steady in June, after falling 0.2% in May.
Later today there will be data on the GfK consumer climate in Germany; European Union M3 money supply and private loans; UK sales data; US data on personal income, personal expenditure, CPI of personal consumption expenditure and revised consumer opinion from the University of Michigan (UoM) and inflation expectations; and Chinese Leading Indicators from the Conference Board.
Today’s key themes and perspectives
Copper prices continued to consolidate early in the session this morning, as they did on Thursday, after their three-day rebound earlier in the week. The rest of the metals look more robust, especially nickel, but it’s one of the weakest metals since February, so there might be some catching up to do on the upside. Now that the U.S. infrastructure deal looks set to go through Congress, sentiment could be further heightened as the day progresses.
The sale of gold has been brutal and prices are struggling to rebound. But given that the US Fed isn’t talking about raising rates until 2023 and bond yields have weakened again, gold’s reaction seems a bit over the top – especially given mounting inflationary pressures and some evidence. rising tensions between the United States and China.