Base metals prices on the London Metal Exchange were on divergent paths on the morning of Monday September 6, after a weaker-than-expected US jobs report on Friday sent out mixed signals.
But base metals prices on the Shanghai Futures Exchange were generally stronger this morning while they tracked the gains seen on the LME on Friday, which came despite the disappointing data from the United States.
* The US added 235,000 jobs in August, well below the 1.05 million jobs created in the prior month
* The US Dollar Index continues to trend lower
* Military coup attempt in Guinea provides a further boost to aluminium prices
Base metals
Three-month base metals prices on the LME were mixed this morning, but the complex was on average down by 0.5%. Aluminium ($2,754.50 per tonne) and zinc ($3,006.50 per tonne) were up by 0.8% and 0.3% respectively, while the rest were down by an average of 1.1%. Tin ($32,725 per tonne) led the decline with a 2% drop, while copper was down by 0.6% at $9,409 per tonne.
The most-active base metals contracts on the SHFE were mainly firmer; the exception was October nickel that was down by 0.5%, while the rest were up by an average of 0.8%, with October copper up by 0.2% at 69,260 yuan ($10,731) per tonne.
Precious metals
Spot gold was little changed at $1,826.49 per oz, with the other precious metals up by an average of 0.3%.
Wider markets
The yield on US 10-year treasuries has edged higher and was recently at 1.32%, compared with 1.29% at a similar time on Friday. The yield picked after US data on Friday showed that while the labor market decelerated, wages were picking up.
Asia-Pacific equities were mainly stronger as the US employment report suggested the Federal Reserve would keep rates on hold for longer: the Nikkei (+1.76%), the Hang Seng (+0.72%) and CSI 300 (+1.78%), while the Kospi (-0.1%) and the ASX 200 (-0.36%) were weaker.
Currencies
The US Dollar Index put in a weak performance last week but was consolidating this morning at around the 92.20 level, having set a low at 91.94 on Friday.
The weaker dollar has generally boosted most of the major currencies in recent days, although there is some consolidation around this morning: sterling (1.3850), the euro (1.1870), the Australian dollar (0.7434) and the Japanese yen (109.79).
Key data
Data out on Monday includes German factory orders, EU Sentix Investor confidence and UK construction purchasing managers’ index. There is no US data because markets are closed for Labor Day.
In addition, UK Monetary Policy Committee member Catherine Mann is scheduled to speak.
Monday’s key themes and views
Most of the base metals are stuck in sideways ranges, some near their multi-month highs and some off their highs, but in general all seem to be holding up well. The exception is aluminium that continues to push higher, with another fresh multi-year high set this morning at $2,775.50 per tonne and closing in on the 2011 high of $2,803 per tonne.
Supply-chain disruptions are affecting manufacturing output and therefore demand for metals, but there is pent-up demand for finished products and with shipping delays also affecting upstream supply, we feel the supply chain will carry more stock and that should counter constrained manufacturing output.
Gold extended gains on Friday with prices well placed to challenge the highs seen in July at $1,833.70 per oz. Gold has some tailwinds with wage inflation on the rise and the dollar showing some weakness.