Markets are looking mixed this morning on Monday August 10, while traders weigh up the cross winds blowing through the markets, Fastmarkets learned.
United States President Donald Trump’s intervention to step in to extend unemployment benefit after Congress failed to come up with a rescue package has provided some support, but his executive orders focused on Chinese tech companies only go further to heighten tension.
* Asian-Pacific equities were mixed, while pre-market western equity index futures were upbeat.
* The dollar index is holding on to most of Friday’s gains, which may be a headwind for metals for a while, especially gold.
Base metals
Three-month base metals prices on the London Metal Exchange were mixed this morning, with copper and aluminium up by 0.8% and 0.1% respectively and copper recently at $6,290 per tonne, while the rest of the complex was off by an average of 0.6%.
The most-traded base metals contracts on the Shanghai Futures Exchange were down across the board this morning after they reacted to the price falls on the LME on Friday. September copper led the way with a 2.6% drop to 50,090 yuan ($7,191) per tonne. September aluminium was down the least with a 0.7% fall, while the complex as a whole was down by an average of 1.7%.
Precious metals
Spot gold was recently quoted at $2,032.74 per oz, down by 0.2% from Friday’s close of $2,035 per tonne and the August 6 high at $2,074.25 per tonne.
Silver was up by 0.4% at $28.39 per oz, platinum was up by 2% at $980 per oz and palladium was up by 0.2% at $2,178.50 per oz.
Wider markets
The yield on US 10-year treasuries was at 0.57% this morning, which is firmer than of late, suggesting a slight pick-up in risk appetite, but overall the yield seems to be swaying between 0.5% and 0.6%, suggesting a base may be forming.
Asian-Pacific equities were mainly firmer this morning: the Kospi (+1.48%), the CSI 300 (+0.96%), the ASX 200 (+1.75%), but the Hang Seng (-0.24%) was weaker, while the Nikkei was closed.
Currencies
The dollar index is consolidating at around 93.49 this morning after rebounding on Friday from Thursday’s low at 92.49.
The stronger dollar led to some weakness in other main currencies: the euro (1.1769), the Australian dollar (0.7155), the yen (105.89) and sterling (1.3047).
Key data
Data already out this morning showed China’s consumer price index rose to 2.7% in July, after 2.5% in June and producer prices fell by 2.4% in July after a 3% fall in June.
Data out later includes a reading of EU investor confidence from Sentix and US job openings.
Today’s key themes and views
After Friday’s general weakness, the metals appear to have rolled over to the downside and - as we had previously thought - they were looking overbought. Given the demand hit in recent months, we would not be surprised to see prices correct further, although initially we expect bargain hunting may cushion the downside.
We remain bullish in the medium term given the amount of money that has been pumped into the financial system and into infrastructure projects.
We thought gold was starting to look overbought in the short term so a dip is not surprising, key now will be how far and how long-lived the dip is. We remain overall bullish - but a short-lived, sharp dip could unwind the overbought condition, readying it for another up leg.
William AdamsFastmarkets