Base metals prices on the London Metal Exchange were mainly weaker on the morning of Tuesday September 7, while all but aluminium on the Shanghai Futures Exchange were down.
* China’s imports and exports growth accelerated in August, compared with July’s increases...
* ...this despite Covid-19 disruptions and container shortages
Base metals
Three-month base metals prices on the LME were mainly weaker this morning; tin had not traded as of 5.53am London time, but the rest were down by an average of 0.3%, with copper down by 0.4% at $9,414 per tonne.
Volume across the complex was low with just 2,215 lots traded, compared with a more usual volume of around 6,000 tonnes at a similar time of day.
The most-active base metals contracts on the SHFE were mainly firmer; the exception was October aluminium that was up by 0.3%, while the rest were down by an average of 0.7%, led by a 1.5% decline in October lead, with October copper down by 0.1% at 69,310 yuan ($10,730) per tonne.
Precious metals
Spot gold was slightly weaker this morning, down by 0.1% at $1,820.88 per oz, while the other precious metals were little changed too.
Wider markets
The yield on US 10-year treasuries has edged higher and was recently at 1.34%, compared with 1.32% at a similar time on Monday.
Asia-Pacific equities were mixed this morning: the Nikkei (+0.94%), the Hang Seng (+0.88%), the CSI 300 (+0.7%), the Kospi (-0.59%) and the ASX 200 (-0.13%).
Currencies
The US Dollar Index put in a weak performance last week but has since been consolidating, and this morning was around the 92.20 level, unchanged from where it was at a similar time on Monday.
With the dollar consolidating, so to were the major currencies: sterling (1.3832), the euro (1.1873), the Australian dollar (0.7423) and the Japanese yen (109.82).
Key data
Data already out on Tuesday shows the United Kingdom’s retail sales monitor climbed by 1.5% year on year in August, after a 4.7% climb in July; Japan’s average cash earnings climbed by 1% year on year in July, after a 0.1% rise in June; Japan's household spending was up 0.7% year on year in July, after a 5.1% fall in June; and Japan's leading indicators came in at 104.1% in July, after a reading of 104.6% in June.
China’s trade data surprised on the upside with exports rising by 25.6% year on year in August, compared with an 18.9% year-on-year increase in July, while imports rose by 33.1% over the same comparison, after a 28.7% year-on-year gain in July.
Other data already out showed German industrial production climbed by 1% month on month in July, after a 1% decline in June.
Later there is data on German and European Union economic sentiment from the Zentrum fur Europaische Wirtschaftsforschung (ZEW), as well as data on EU final employment change and revised EU gross domestic product.
Tuesday’s key themes and views
Consolidation across the board seems to be the order of the day so far, meaning most of the base metals remain in sideways ranges, some near their multi-month highs and some off their highs, but in general all seem to be holding up well. Aluminium is the one pushing the envelope on the upside, it set another multi-year high on Monday at $2,782 per tonne and is closing in on the 2011 high of $2,803 per tonne.
Given there are many headwinds for the global economy, especially the ramifications from supply-chain disruptions, there seems to be growing risk that the apparent endless uptick in equity markets might be running ahead of the fundamentals. Any correction in equities may well drag the metals down too – so we are wary about which way the metals will head once they move out of their sideways ranges. We remain long-term bullish but acknowledge there are risks in the short-to-medium term.
Gold extended gains last Friday with prices well placed to challenge the highs seen in July at $1,833.70 per oz, but the market does seem to be finding resistance around that level.