Base metals prices on the London Metal Exchange were mainly firmer on the morning of Tuesday April 5, but trading was light with China on holiday.
* Market now focused on the next round of sanctions against Russia and whether they will include a ban on importing Russian oil
* Firmer metals prices underpinned by higher energy prices and concerns about shortages
Base metals
Three-month base metals prices on the LME were mainly firmer this morning, with tin the only metal showing a loss, down by 0.8% at $43,665 per tonne. The rest of the complex, with the exception of nickel (which has yet to open), were up by an average of 1%. This follows a generally weaker performance on Monday, when copper was up by 1.5%, but the rest were down by an average of 1.3%.
Three-month aluminium and zinc gained the most - with aluminium up 1.7% to $3,472.50 per tonne and zinc, up 1.3% to $4,326 per tonne - which we put down to concerns over higher energy prices and the potential for energy shortages in Europe further affecting the ability of smelters to function.
Precious metals
Spot gold prices were under pressure with prices down by 0.2% at $1,929.63 per oz, while silver was up by 0.2% at $24.56 per oz. Platinum, meanwhile, remained unchanged at $987 per oz, but palladium was up by 0.6% at $2,299 per oz.
Wider markets
United States 10-year treasuries yields were little changed this morning and were recently at 2.42%, up from 2.40% at Monday’s close.
Asia-Pacific equities were little changed but firmer this morning: the Nikkei (+0.16%), the ASX 200 (+0.03%) and the Kospi (+0.1%).
Currencies
The US Dollar Index was consolidating just below high ground this morning and was recently at 98.95, this after last week’s test of support at around the 97.70 level. Overhead resistance now lies ahead of 99.50.
With the dollar stronger, the other major currencies were quite mixed with the euro (1.0967) weaker, the Japanese yen’s (122.52) and sterling (1.3128) consolidating, while the Australian dollar (0.7615) was strengthening on the back of a less dovish statement from the Reserve Bank of Australia.
Key data
Economic data out today showed Japan’s average cash earnings rose 1.2% in February, after a 1.1% rise in January, with household spending rising 1.1% in February after a 6.9% rise in January.
Later there is data on French industrial production, services purchasing managers index (PMI) data out across Europe and the US and data on the US trade balance.
In addition, US Federal Reserve Federal Open Market Committee (FOMC) members Lael Brainard and John Williams are scheduled to speak.
Tuesday’s key themes and views
The base metals are generally holding up well, some better than others, but dips are generally being well supported. With another round of sanctions about to be applied to Russia there is further risk that supplies, or production, could be hit. Conversely, there is a risk that the combination of China’s lockdowns, China’s weak economic data and concerns about high global energy prices, could start to have an impact on demand. That said, weakness in China, could prompt the Country to provide further stimulus measures.
Gold prices are consolidating either side of the $1,925 per oz. On the one hand, they have a stronger dollar and higher bond yields to contend with; on the other, bond market weakness, inflation and uncertainty over how the war in Ukraine will unfold are supportive factors. We suspect the risk lies to the upside.