Base metals prices on both the London Metal Exchange and Shanghai Futures Exchange were mainly firmer on the morning of Wednesday March 23, with April nickel prices on SHFE registering an almost 2% gain.
* Will Russia pushback against sanctions by curbing oil exports?
* LME nickel prices found their price level on Tuesday.
* The sell-off in bonds is seeing a rotation in other asset classes.
* UK consumer prices rose by 6.2% in February year on year, up from January’s 4.4% rise.
Base metals
Three-month base metals prices on the LME were mainly firmer this morning, the exception was copper that was down by 0.1% at $10,274 per tonne. The rest of the complex, excluding nickel that does not start trading until 8am London time, was up by an average of 0.7% this morning.
Volumes on the LME remain light with 1,278 lots traded as of 6am London time, which was even lower than the 1,935 lots traded at a similar time on Tuesday.
The most-traded contracts on the SHFE were also mixed on Wednesday morning, with May tin down by 0.3%, May aluminium and copper were little changed with the latter showing a 10 yuan per tonne gain to 73,140 yuan ($11,477) per tonne. April nickel led on the upside with a 1.9% gain to 210,300 yuan per tonne, which would suggest an international nickel price of around $29,205 per tonne.
Precious metals
Gold, silver and platinum were mixed but little changed overall this morning, with gold off by 0.1% at $1,918.61 per oz, but the main mover was palladium that was up by 1.3% at $2,556 per oz.
Wider markets
With the United States in interest-rate-hiking mode, the bond market is suffering a correction and less demand for bonds is underpinning the rise in yields – the US 10-year treasuries yield was recently at 2.4%, compared with Tuesday’s 2.33%.
Asia-Pacific equities were stronger across the board: the Hang Seng (+1.65%), the Nikkei (+3%), the Kospi (+0.92%), the ASX 200 (+0.5%) and China’s CSI 300 (+0.53%).
Currencies
The US Dollar Index was consolidating on Wednesday morning and was recently at 98.42, compared with 98.91 at a similar time on Tuesday.
With the dollar’s rise on pause, the other major currencies were generally firmer: the euro (1.1035), the Australian dollar (0.7457) and sterling (1.3273), while the Japanese yen’s (121.07) recent slide has halted this morning.
Key data
Economic data already out on Wednesday showed the Bank of Japan’s core consumer prices (CPI) were up by 1% year on year in February, compared with a 0.8% rise in January. Over the same period, the United Kingdom's core CPI rose by 5.2%, up from 4.4% previously, and retail prices (RPI) climbed by 8.2%, compared with a 7.8% gain previously. See table below for further details.
Later there is data on UK house prices, US data on new home sales, EU consumer confidence and US crude oil inventories.
In addition, the UK will announce its annual budget and Bank of England Governor Andrew Bailey, US Federal Reserve Chair Jerome Powell and Federal Open Market Committee member James Bullard are scheduled to speak.
Wednesday’s key themes and views
The base metals still seem to be adjusting to recent volatility but are generally holding up well. With money coming out of bonds and looking for new inflation-proof homes, then commodities are likely to attract investors, especially as economic growth is strong (for now), China is boosting growth and supply remains constrained.
Gold prices are also generally holding up well, with prices around where they were before March 7, but rising bond yields and risk-on in financial markets are producing a headwind to counter the tailwind from the inflationary pressures and uncertainty over where the Russia-Ukraine war is heading.