Metals gains amid hopes of further stimulus measures in China
Daniel Hynes
Senior Commodity Strategist | helping investors and companies navigate macro, political, economic & environmental issues
Highlights
A stronger USD weighed on investor appetite across commodity markets. However, strong haven demand supported precious metals.
Prices and commentary accurate as of 07:00 Sydney/05:00 Singapore/17:00(-1d) New York/22:00(-1d) London.
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Ahead Today
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Market Commentary
Gold bared down on another record high as the focus returned to the political landscape. With only three weeks until the US presidential election, investors are increasingly seeking haven assets such as the precious metals. Polls suggests the contest is still too close to call, creating uncertainty among investors. The USD rallied after Republican candidate Donald Trump told Bloomberg that he would raise tariffs sharply, cut taxes and seek more direct consultation with the US Federal Reserve. Haven buying has also been driven by increasing geopolitical risks amid elevated tensions in the Middle East.
Copper edged higher as investors await further announcements from China on stimulus measures. A press briefing involving China’s Housing Ministry, the PBoC, Finance Ministry and the National Financial Regulatory Administration will be held on Thursday to promote the steady and healthy development of the property sector. The announcement triggered a rally across property stocks on the equity market, dragging related sectors such as commodities higher with it. Aluminium gained despite signs of stronger supplies. Metal output is expected to rise 3% in Q4 2024 to 11mt, according to Shanghai Metals Market. This has been supported by stronger hydro power generation in Yunnan.
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Iron ore futures were under pressure early in the session amid concerns over higher supply. Vale said its September quarterly production was its highest since 2018. Output rose 5.5% y/y to 90.971mt. Rio Tinto also reported a better-than-expected level, with shipments up 1% y/y to 84.5mt. However, futures reversed course following the announcement of China’s press conference on the housing market.
Crude oil prices were steady as the market monitors the situation in the Middle East. Israel launched a fresh attack in southern Beirut, despite Lebanon saying it had received some form of guarantee from the US that Israel will ease its offense. This raised concerns that US influence over Israeli tactics remains weak, bringing into question the US calls for Israel not to target Iran’s oil facilities in any retaliatory attack. Meanwhile, Iranian authorities have started efforts to contain an oil leak from subsea pipelines near the Kharg Island terminal. It appears to be unrelated to the Israel-Hamas war, but it drew attention to Iran’s oil export facilities.
Global gas prices fell as risks of supply disruptions eased. Flows from terminals that import LNG in northwest Europe rose to the highest levels since April, earlier this week, according to Bloomberg data. Several LNG vessels have diverted from Asia this month after European gas futures reached this year’s closing highs. Unusually warm weather also weighed on sentiment in Europe. The mean temperature in Zurich is forecast to be 7o Celsius above the 30-year norm, reducing household heating demand. Weakness in the European market dragged North Asian LNG prices lower. The IEA warned that LNG capacity is set to increase by 47% by 2030. The resultant overhang of capacity could set to depress international prices and set the stage for fierce competition between supplies, the agency said in its World Energy Outlook report.?
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Chart of the Day
With energy security issues still high on the agenda, China's imports of LNG have remained well above normal seasonal levels?
Assistant Vice President, Wealth Management Associate
4 个月Very helpful