Base metals prices on the London Metal Exchange edged up on the morning of Friday April 8, while those on the Shanghai Futures Exchange were mainly weaker.
* The markets are still focused on monetary tightening in the United States and how that might slow economic growth...
* ...and how will China’s Covid-19 lockdowns hit demand
Base metals
Three-month base metals prices on the LME were up across the board on Friday, with the exception of nickel (which has yet to open), with gains averaging 0.4%, although this was after a general day of weakness on Thursday.
Lead led the gains with a 0.8% rise to $2,391 per tonne, with copper up 0.6% at $10,375 per tonne, while zinc, at $4,169 per tonne, and tin, at $43,600 per tonne, were lagging behind with gains of 0.1%.
The most-traded May contracts on the SHFE were mainly weaker, with the exception of copper, which was up by 0.1% at 73,650 yuan ($11,577 per tonne), and nickel, which was up by 3.3%. The other base metals were all down - by an average of 1.3%.
Precious metals
The precious metals were stronger this morning, up by an average of 1.6% - although that was skewed by a 3.7% rise in palladium to $2,270.90 per oz, while gold was up by 0.4% to $1,932.08 per oz.
Wider markets
US 10-year treasuries yields were holding up in high ground and were recently at 2.65%, the recent high being 2.66%.
Asia-Pacific equities were mixed this morning: the Nikkei (+0.13%), the ASX 200 (+0.51%), the Kospi (+0.17%), CSI 300 (+0.53%) were all up, while the Hang Seng (-0.13%) fell.
Currencies
The US Dollar Index was still rising early on Friday and was recently at 99.84, having broken through resistance at 99.42 on Tuesday. The next target is likely to be the highs around 103-103.83 seen in 2017 and 2020.
With the dollar stronger, most of the other major currencies were weaker: the euro (1.0865), the Japanese yen’s (124.00), sterling (1.3061) and the Australian dollar (0.7480).
Key data
Economic data out today showed Japan’s consumer confidence ease to 32.8 in March, from 35.3 in February, while economy watcher sentiment climbed to 47.8 in March, from 37.7 in February.
Later on Friday there is data on Italian retail sales and US final wholesale inventories.
Friday’s key themes and views
The base metals have seen some weakness in recent days and we put that down to market concerns about how demand will be affected in the short term by China’s latest Covid-19 lockdowns and, in the longer term, by higher energy price, inflation and rising interest rates. But generally, underlying sentiment seems to be supportive, on concerns about supply disruptions and falling inventory levels. We expect China to provide more stimulus to support growth and that is likely to put metals on an upward track again.
Gold prices continue to hold up well, especially when you consider the strength of the dollar and rising bond yields. Although with bond yields expected to continue rising, perhaps investors will hold back from investing in bonds, waiting for higher yields down the road. Overall, we suspect the risk lies to the upside for gold prices.