Yesterday was another down day for the metals and markets as geopolitical issues added to the already present concerns affecting the markets, namely sovereign debt in Europe and the possibility of a slowdown in China. Gold and the dollar were the two to buck the trend highlighting investors shift into safe-havens. At the lows of the day base metal prices were off 2.3 percent, but they closed down by an average of 1.4 percent.
| 7:13 AM | +/- | +/- % | Lots | |
| Cu | 8265 | 111.5 | 1.4% | 3451 |
| Al | 2283 | 31.25 | 1.4% | 494 |
| Ni | 21800 | 196 | 0.9% | 158 |
| Zn | 2137 | 42.25 | 2.0% | 1821 |
| Pb | 2215 | 36.75 | 1.7% | 189 |
| Sn | 23900 | 25 | 0.1% | 22 |
| Steel Med | 510 | 0 | 0.0% | 0 |
This morning the buyers have returned and the base metals are up by an average of 1.2 percent, with most of the metals seeing good gains with the exception of tin that is up just 0.1 percent. Copper is up 1.4 percent to $8,265 after lows yesterday of $8,050. Volumes into the rebound have been relatively good for copper and zinc, but are lower than we saw on recent down days. So for the moment prices have avoided testing last week’s lows and are now in consolidation mode.
| Time | Country | ACTUAL | Expected | Previous | |
| 9:00am | EUR | German Ifo Business Climate | 107.6 | 107.6 | |
| 9:00am | EUR | Italian Retail Sales m/m | 0.3% | 0.0% | |
| 9:30am | GBP | Revised GDP q/q | 0.8% | 0.8% | |
| 9:30am | GBP | Prelim Business Investment q/q | 0.6% | 0.7% | |
| 9:30am | GBP | Index of Services 3m/3m | 0.5% | 0.3% | |
| 10:00am | EUR | Industrial New Orders m/m | -2.6% | 5.5% | |
| 12:20pm | GBP | MPC Member Sentance Speaks | |||
| 1:30pm | USD | Core Durable Goods Orders m/m | 0.7% | -0.4% | |
| 1:30pm | USD | Unemployment Claims | 434K | 439K | |
| 1:30pm | USD | Core PCE Price Index m/m | 0.1% | 0.0% | |
| 1:30pm | USD | Durable Goods Orders m/m | 0.2% | 3.5% | |
| 1:30pm | USD | Personal Spending m/m | 0.5% | 0.2% | |
| 1:30pm | USD | Personal Income m/m | 0.4% | -0.1% | |
| 2:00pm | EUR | Belgium NBB Business Climate | -2.7 | -2.8 | |
| 2:55pm | USD | Revised UoM Consumer Sentiment | 69.5 | 69.3 | |
| 2:55pm | USD | Revised UoM Inflation Expectations | 0.03 | ||
| 3:00pm | USD | New Home Sales | 311K | 307K | |
| 3:00pm | USD | HPI m/m | -0.1% | 0.4% | |
| 3:30pm | USD | Crude Oil Inventories | -1.9M | -7.3M | |
| 5:00pm | USD | Natural Gas Storage | -6B | 3B | |
| 6:00pm | EUR | Buba President Weber Speaks | |||
| Tentative | USD | Treasury Currency Report | |||
| 11:50pm | JPY | Trade Balance | 0.63T | 0.59T | |
| 11:50pm | JPY | CSPI y/y | -1.0% | -1.1% | |
In Shanghai the February contracts are up by an average of 0.7 percent, copper leads the advance with a 1 percent gain to Rmb 62,450, zinc is up 0.8 percent at Rmb 17,425, while aluminium is up 0.2 percent at Rmb 16,290. Spot copper in Changjiang is up just 0.2 percent at Rmb 61,850-62,250 so the market is back in contango, while the LME/Shanghai arb puts imported copper at a premium of $310/tonne.
The dollar remains strong with the dollar index at 79.56, yesterday it extended gains to 79.82 as it broke out of a small bull flag. The euro is weak at 1.3392 as are other currencies with the pound at 1.5830, the aussie at 0.9795, although the yen has firmed slightly to 83.15. Gold is at $1,378 and oil is at $81.70. So again the stronger dollar, gold and yen all suggest haven buying.
Equities – the Dow closed down 1.3 percent, the Nikkei is down 0.8 percent, but it had some catching up to do as it was closed yesterday; the Hang Seng is up 0.75 percent, China’s CSI is up 2.3 percent and the MSCI Asia Apex is up 0.3 percent. So it does look as though some bargain hunting is emerging.
On the economic data front today is another busy day with some of the usual Thursday US data coming out today ahead of tomorrow’s Thanksgiving. German Ifo business climate data is out at 9am GMT, , while in the US we have initial jobless claims, durable goods orders, personal income and spending and new home sales, to name a few – see table on right for more details.
Our view is that given the deterioration in the fiscal/economic and geopolitical backgrounds, and considering the rapid gains seen since June, there is room for deeper corrections as profits are taken. However given the buy the dip mentality that seems ingrained in the market, we feel there will be bouts of buying along the way, but we would expect rebounds to be sold into.
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