Risk-off appetite has prompted equity and commodity markets to sell off strongly this morning, however equity markets partially recovered this afternoon. Tensions between the US and China continue to escalate. China released the latest National Party Congress, and have not given a target economic growth rate. This does not suggest that they will not embark on macroeconomic supporting policies. A brief analysis of the NPC outlines quite the opposite, but investors were disappointed by the lack of ‘traditional’ stimulus measures. UK data released today was weaker than expected, retail sales including fuel for April was -22.6% y/y as public sector net borrowing increased to £61.4bn in April, up from £2.3bn in March.
LME prices closed down today except for zinc. Risk-off sentiment amid weak uncertainty and market disappointment on Chinese stimulus measure resulted in prices selling off sharply today. Nickel gave back recent gains, taking out support at $12,300/t to close at $12,250/t. Protracted selling pressure prompted copper to break through $5,300/t and closed the week at $5,288/t. Ali was well bid below $1,500/t and closed at $1,506.5/t. Lead was well supported at $1,610/t and closed at $1,645/t. Cash to 3’s were mostly range-bound except Ali which tightened into $25.25/t.
Energy prices managed to recover some of today’s earlier losses but are still down, with Brent and WTI trading at $34.99/bl and $32.95/bl respectively. Precious metals have been bid today with gold and silver trading at $1,734.64/oz and $17.18/oz respectively.