Metal prices finished mixed on Monday, with copper managing to close up with a modest gain, although the rest of the group did not follow, finishing with slight losses. Much to our surprise, the markets took yesterday's Chinese announcement of a stop in buying metal for stockpiling purposes somewhat in stride, with prices displaying no discernible weakness. However, we are not sure that this is the final reading of the situation, and still maintain that this announcement should be considered a modest negative for metals going forward.
We are off to a rather quiet start as of this writing, with gains seen in most metals, although prices are well off earlier highs. An unusual end-of-the-quarter spike in Brent oil prices in Asian trading lifted metals higher in sympathy earlier in the day, but that surge has now ended, and may explain why metals are also off earlier highs.
On the US macro side, we get June consumer confidence readings later today, as well as June Chicago PMI, (expected at 38.5), and the Case-Shiller home price index. Of the three, the Chicago PMI will likely be the most important, as it may set the stage for the more critical ISM manufacturing reading out later in the week.
Out of Europe, we have reports that German unemployment rose to its highest level since 2007, as the number of people out of work rose to 3.5 million, bringing the adjusted jobless rate to 8.3%. Out of the UK, final GDP figures for Q1 show that the economy contracted by 2.4%, its biggest decline since 1958. However, there was some better news on the housing front, with the Nationwide Building Society saying that housing prices increased 0.9% in June.
In other markets, the dollar is weaker today, hovering just over 1.4100 against the Euro, and likely contributing to the modest gains we are seeing in metals. Oil prices are now up only $.20 after an almost a $2/brl advance seeing earlier. Stock futures are called to open modestly higher, but we suspect trading conditions will quiet down as we approach the US holiday on Friday.
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COPPER SUPPORT: $4750 / RESISTANCE: $5388
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COPPER SUPPORT: $4750 / RESISTANCE: $5388
We are currently at $5110, up $11, and basically where we were at this time yesterday. Although our charts suggest we could push higher from here given that the short-term upchannel remains intact, we remain skeptical that we will retest the recent high of $5388 on this particular run.
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ALUMINUM SUPPORT: $1650 / RESISTANCE: $1700
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ALUMINUM SUPPORT: $1650 / RESISTANCE: $1700
Prices are at $1646, up $6, and seem to be bouncing on either side of $1650, with participants unsure as to which direction to take the market from there. The fact that LME stocks are starting to ramp up again, (up by almost 27,000 tons today), will likely increase the pressure towards the downside.
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ZINC SUPPORT: $1500 / RESISTANCE: $1640
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ZINC SUPPORT: $1500 / RESISTANCE: $1640
Zinc is at $1573, up $13/MT, with prices still tracking higher along the short-term upchannel. However, today's trading range is very uneventful, with less than a $20/MT trading range in place.
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LEAD SUPPORT: $1600 / RESISTANCE: $1720
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LEAD SUPPORT: $1600 / RESISTANCE: $1720
We are at $1722, up $19, but seem to be struggling to close over $1720 resistance. Prices got over that mark yesterday as well, but could not close above it.
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NICKEL SUPPORT: $13,750 / RESISTANCE: $15,900
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NICKEL SUPPORT: $13,750 / RESISTANCE: $15,900
Nickel is at $15,865, up $65. The market did mark a fresh 2009 high earlier today when it traded at $16,075. We are looking for two successive closes above $15,900 to warrant another higher shift in the trading range.
* Bloomberg reports that BHP Billiton said parts of its Perseverance nickel mine in Western Australia are closed following a rock fall, the second such event to halt operations this month.
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TIN SUPPORT: $14350 / RESISTANCE: $15925
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TIN SUPPORT: $14350 / RESISTANCE: $15925
We are at $14,900 on tin, up $295. Although tin’s short-term upchannel has been broken, the selling is not accelerating, and we seem to be consolidating instead.
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