MORNING VIEW: Gains across most base metals suggests underlying sentiment remains bullish

Base metals prices on both the London Metal Exchange and Shanghai Futures Exchange were generally stronger this morning, Friday July 23, the exception was lead on the LME that was down by 0.5%, but that was after a strong gain on Thursday.

Lead, tin and nickel all pushed the boundary on the upside on Thursday with gains of 1.5% or moreEuropean Central Bank projected a dovish outlook on monetary policy on Thursday
Base metals
LME three-month base metals prices were for the most part higher with lead bucking the trend with a 0.5% drop to $2,377.50 per tonne, but that was after the heavy metal reached levels not seen since July 2018. The rest of the complex were up by an average of 0.8%, with nickel ($19,130 per tonne) and tin ($34,500 per tonne) up by 1.3% and 1.2% respectively, while copper was up by 0.5% at $9,511.50 per tonne. The rebound after Monday's show of weakness, suggests the underlying bull market remains alive, supporting the supercycle theme.

The most-active base metals contracts on the SHFE were up across the board with gains averaging 2.1%, led by a 4.2% rise in September tin and a 3.2% rise in August nickel, while September copper was up by 1.8% at 69,880 yuan ($10,801) per tonne.

Precious metals
Spot gold prices were down by 0.2% this morning at $1,804.19 per oz, silver was down 0.1% at $25.40 per oz, while platinum ($1,097 per oz) was up by 0.1% and palladium ($2,7293.80 per oz) was down by 0.1%, but the latter was up 2.7% on Thursday.

Wider markets
The yield on US 10-year treasuries was at 1.28% this morning, up slightly from 1.27% at a similar time on Thursday, but up significantly from Tuesday's slump to 1.14%.

Asia-Pacific equities were mixed on Friday: the Nikkei (closed), the Kospi (+0.13%), the Hang Seng (-1.11%), the ASX 200 (-0.03%) and the CSI 300 (-1.26%). Concerns over the Delta variant seem to be hitting parts of Asia hard.

Currencies
The US Dollar Index has been quite volatile in recent days - it was recently at 92.88 having been to a high of 93.10 on Wednesday and a low of 92.50 on Thursday, but the overall trend is upward.

The major currencies were mixed, the Australian dollar (0.7371) and sterling (1.3763) have rebounded from weakness earlier in the week, the euro (1.1767) was consolidating on a back foot and the Japanese yen (110.27) was weaker this morning.

Key data
Friday's economic calendar is busy with flash purchasing managers' index data on manufacturing and services out across Europe and the United States. In addition, there was data on United Kingdom consumer confidence that dropped to -7 in July from -9 in June and later there is data on UK retail sales.

Friday's key themes and views
Most of the metals have been consolidating in high ground; nickel, lead and tin have broken higher this week, aluminium and zinc are still in there sideways ranges and copper that was looking the most vulnerable of the pack, is now challenging the top of its sideways range - a break above $9,633 per tonne would indicate a resumption of the upward trend. Generally, the fact so far dips have been well supported and the opportunity to see follow-through weakness has not been taken, suggests sentiment is not bearish - key will be whether it turns bullish again, but we may have to wait until after the summer lull for that though.

Gold prices have lost momentum, silver prices are drifting lower, platinum prices are rangebound and palladium prices seem to be undergoing another strong rebound. Overall, it looks like gold is waiting for more news about inflation.

Silver outperformance driven by weak supply growth

Supply data still points to major silver deficit this year

Canada second most significant player in global mining M&A

Plenty of potential for continued rotation out of tech

Platinum to palladium ratio low, platinum to gold high, versus history