Base metals prices on the London Metal Exchange were mixed on the morning of Thursday April 14, while those on the Shanghai Futures Exchange were also mixed, but with gains outweighing losses.
* China expected to cut the reserve requirement ratio (RRR) for the country's banks
* United States 10-year treasuries yields have eased, suggesting the recent reaction to US Federal Reserve rhetoric may have been discounted
Base metals
Three-month base metals prices on the LME were mixed on Friday morning, with copper up by 0.6% to $10,367 per tonne and tin up 0.5% to $43,365 per tonne, while aluminium ($3,255 per tonne) and zinc ($4,453 per tonne) were little changed and lead was down by 0.9% at $2,422.50 per tonne.
The most-traded May contracts on the SHFE were for the most part stronger, with the exception of lead and zinc that were down by 0.2% and 0.4% respectively. The rest were up by an average of 1.3%, with May copper up 0.4% to 74,200 yuan ($11,654) per tonne.
Precious metals
Precious metals were also mixed on Thursday morning, with silver up 0.2% to $25.74 per oz and palladium up 1.6% tp $2,369 per oz, while gold was down 0.3% to $1,772.75 per oz and platinum fell 0.2% to $987.50 per oz.
Wider markets
US 10-year treasuries yields have started to retreat and were recently at 2.68%, compared with 2.70% at Wednesday’s close, and down from the recent peak of 2.82%.
Asia-Pacific equities were mainly stronger this morning: the Nikkei (+1.16%), the ASX 200 (+0.59%), the CSI 300 (+1.69%) and the Hang Seng (+0.8%) were all up, while the Kospi (-0.02%) bucked the trend as the Bank of Korea raised interest rates (as did the Monetary Authority of Singapore).
Currencies
The US Dollar Index was pulling back from yesterday’s multi-year highs at 100.53 and was recently at 99.62, with some profit-taking activity seen in response to the recent gains. Upside targets are still likely to be the highs of 103-103.83 seen in 2017 and 2020.
The pullback in the dollar has led to the major currencies rebounding: the euro (1.0915), sterling (1.3140), the Japanese yen (125.36) and the Australian dollar (0.7464).
Key data
Key economic data coming out on Thursday is focused on the US, with data on retail sales, initial jobless claims, import prices, University of Michigan consumer sentiment and inflation expectations, business inventories and natural gas storage.
In addition, the European Central Bank will set interest rates, issue a statement and hold a conference, while the US Federal Reserve's Federal Open Market Committee member Loretta Mester is scheduled to speak.
Thursday’s key themes and views
The LME metals are mainly moving sideways on Thursday, although zinc is working higher, while aluminium has been relatively weak and is looking vulnerable - although dip buying across the complex remains in force and could support aluminium too. Indeed, we expect it to, now that there is a slightly more risk-on feel across broader markets. For zinc, the fundamentals remain strong, although there is the threat that energy supplies in Europe could tighten up further and stocks continue to fall. The slowdown in China is a double-edged sword for the metals, but easier monetary policy, or increased fiscal support, in China will be a bullish factor. On balance, we expect the metals to remain supported. But we are keeping an open mind about the medium term and whether the metals will start to price-in a recession.
Gold prices have reflected the increased concerns about inflation, the possibility that broader markets will correct and the geopolitical risks that may be about to escalate again in Ukraine. But, in the short term, some pick-up in risk appetite may turn out to be a headwind.