Base metals prices were mainly lower across both the London Metal Exchange and the Shanghai Futures Exchange on Tuesday September 28, the exception was LME copper.
* Oil prices extend gains; spot Brent crude approaching $80 per barrel.
* US 10-year treasuries yields push through 1.5%.
Base metals
The three-month copper price on the LME was up by 0.3% at $9,376.50 per tonne and seemed buoyant this morning, while the rest of the complex were showing varying degrees of weakness and were down by an average of 0.6%, led by a 1.1% fall in nickel to $18,680 per tonne.
The most-active base metals contracts on the SHFE were weaker across the board by an average of 1.9% while the complex followed the general weakness seen across the LME base metals on Monday, when the LME complex closed down by an average of 1.3%. Copper in Shanghai was down the least, the November contract was off by 0.1% at 69,240 yuan ($10,717) per tonne.
Precious metals
Spot gold and silver prices were both down by 0.2% at $1,748.44 per oz and $22.58 per oz this morning, while the more industrial platinum ($987 per oz) and palladium ($1,972.60 per oz) were up by 0.7% and 0.4% respectively.
Wider markets
The yield on US 10-year treasuries started to climb toward the end of last week following the US Federal Open Market Committee (FOMC) meeting and the rally has extended this week; it was recently at 1.51%, compared with 1.46% at a similar time on Monday and having been rangebound around the 1.3% level previously.
Asia-Pacific equities were mixed on Tuesday morning: the Nikkei (-0.27%), the Hang Seng (+1.58%), the CSI 300 (+0.18%), the ASX 200 (-1.39%) and the Kospi (-1.07%).
Currencies
The US Dollar Index was consolidating on Tuesday morning and was recently at 93.39, compared with 93.28 at a similar time on Monday. The recent high was in August at 93.73.
Most of the other major currencies were mixed: sterling (1.3715) and Australian dollar (0.7309) were stronger, the euro (1.1700) was consolidating and the Japanese yen (111.21) was weaker.
Key data
Data already out on Tuesday showed the Bank of Japan’s core consumer price index (CPI) climb by 0.3% year on year in September, after a 0.2% rise in August.
Later on today there will be data on Germany’s GfK consumer climate and US data on goods trade balance, wholesale inventories, house prices, consumer confidence and the Richmond manufacturing index.
In addition, for the second day running there is a barrage of central banker speeches from the likes of European Central Bank president Christine Lagarde, United Kingdom Monetary Policy Committee member Catherine Mann, US Federal Reserve chair Jerome Powell and FOMC members Charles Evans, Michelle Bowman and Raphael Bostic.
Tuesday’s key themes and views
Fuel shortages and higher fuel prices in China and Europe, on top of shipping stress, are affecting industry and manufacturing, so both supply and demand will be affected and we will need to see how that pans out. But with manufacturing also being affected by the semiconductor shortage there is a risk that demand is affected more than supply. In addition, with treasury yields on the rise, signaling less availability of ultra-cheap money, economic activity may be about to face stronger headwinds and could lead to more risk-off sentiment in markets. As such, we feel a bit more cautious for now.
Gold prices are drifting downward, but higher fuel prices on top of existing inflationary concerns, combined with the possibility of more risk-off, may mean investors view gold, which is already $330 per oz below its peak, as a relatively cheap haven.