Base metals prices on the London Metal Exchange were mixed on the morning of Monday March 14, albeit with nickel still suspended from trading on the exchange, while prices on the Shanghai Futures Exchange were all weaker.
* US dollar holding at close to 2022 high
* US 10-year treasury yields back above 2%
* Markets bracing for interest rate rises this week
Base metals
Three-month base metals contracts on the LME, with the exception of the still-suspended nickel, were mixed, with copper down 0.4% at $10,060 per tonne, aluminium down 0.7% at $3,456.50 per tonne and tin down 2.3% at $43,250 per tonne, while lead was up 0.4% at $2,325.50 per tonne and zinc up 1.3% at $3,845 per tonne.
The most-traded contracts on the Shanghai Futures Exchange were down across the board by an average of 1.3% on Monday morning, led by a 3.3% fall in April nickel and a 2.5% fall in May tin. April copper was off by 0.3%, at 71,880 yuan ($11,305) per tonne.
Precious metals
Precious metals also weakened across the board with spot gold and silver prices both down by 0.6%. Gold was down to $1,976.61 per oz and silver down to $25.67 per oz. Platinum was down 1.9% at $1,057.50 per oz and palladium was down 3.8% to $2,700 per oz.
Wider markets
The United States 10-year treasury yield continued to climb, ahead of this week's expected interest rate hike by the US Federal Reserve, and was recently at 2.03%, compared with 1.98% at a similar time on Friday.
Asia-Pacific equities were extremely mixed on Monday: the Hang Seng (-4.69%), the Nikkei (+0.58%), the Kospi (-0.59%) and the ASX 200 (+1.21%) were all up, while China’s CSI 300 (-3.06%) fell, with Chinese-orientated markets - especially the tech companies - having been hit hard as China enforces further strict Covid-19 lockdowns in Shenzhen.
Currencies
The US Dollar Index was in high ground again on Monday morning, and was recently at 99.12, compared with 98.77 at a similar time last Friday. Last Monday’s high was 99.42.
The other major currencies are mixed: the euro (1.0924) was oscillating in low ground, the Australian dollar (0.7240) is under pressure, while sterling (1.3032) is rebounding after an earlier spike lower and the Japanese yen (117.76) is weaker and not attracting haven buying, Fastmarkets understands.
Key data
Economic data out already on Monday showed German wholesale price index (WPI) rising by 1.7% in February, higher than an expected 0.9%, but down from a 2.3% rise in January.
Later there is data on France’s trade balance and the United Kingdom’s leading indicators. There are also Eurogroup meetings today.
Monday’s key themes and views
The base metals on the LME seem to be treading water after a really confusing time last week, especially concerning the workings of the LME. Trading may well remain subdued until traders see how the market handles the restarting of trading in nickel. Overall, base metals prices are expected to remain underpinned given the war in Ukraine is expected to cause further supply disruptions, but concerns that high energy prices may lead to recession, may also cap the upside.
The combination of increased inflationary pressure amid higher commodity prices, heightened concerns over where the Russian/Ukraine war is heading and the likelihood that higher energy prices could tip economies into a recession and therefore turn central banks more dovish again are underpinning the upward trend in gold.