Markets seemed to be coasting along without too many problems until this morning when unfortunately we have woken up to some rather sharp declines. With all reported LME markets in the red overnight, not even our falling dollar was able to make any considerable difference. The overnight fall now sees all LME reported metals at their lowest level this month in USD or AUD currency terms.
Copper Down USD 238.00
Aluminium Down USD 59.00
Lead Down USD 48.50
Nickel Down USD 180.00
Tin Down USD 535.00
With some offers out last night, one client has already declined to bid, advising that there prefer to wait to see where the markets settle. We find that a sharp overnight fall in the markets can send a swift shockwave, particularly in Asia where buyers tend to be slightly more speculative in their buying.
With the 2012 London Olympics only days away, please find some interesting facts on the Olympics at the bottom of our market update.
**** DJ BASE METALS: LME Metals Fall in Asia; Strong Dollar Weighs **** By Clementine Wallop
Base metals on the London Metal Exchange fell in Asian trading Monday, as a stronger U.S. dollar damped demand and concerns over the euro-zone debt crisis weighed on risk appetite. Prices pulled back across the complex as the U.S. dollar strengthened against the euro, making dollar-priced commodities more expensive to investors holding other currencies.
Concerns about the health of the Spanish economy escalated Friday after yields on Spanish 10-year sovereign bonds reached 7.24%, a level that could require Spain to ask for more support from other euro-zone countries. “Renewed European debt concerns backed by a stronger dollar…[are] likely to further weigh on the prices of industrial metals” Monday, analysts at Nirmal Bang, a brokerage, said in a report.
HSBC’s China manufacturing purchasing managers index, due for release Tuesday, could also drive price direction this week as metal prices are sensitive to indicators of changes in Chinese demand. Physical demand for metals in China has been slow since the start of July due to seasonally lower demand for end-products. The physical markets will likely remain sluggish in August before picking up in September, Asian traders said.