U.S. equities have recovered from early losses at the time of writing, with tech stocks weighing on the indices. Empire manufacturing in the U.S. improved to 30.9, but retail sales data tomorrow is key to help to confirm weaker consumer sentiment and higher inflation. Inflation data in Europe and the U.K. will be key this week, especially after the BOE Governor Andrew Bailey indicated he was uneasy about rising inflation. Data from China overnight failed to avert fears of a slowdown, and markets indicate that we could see more stimulus from the government. Coal output shows vital signs of recovery, putting further downward pressure on prices. The dollar was firmer today and holds above 95, which is a key level. Yields have rallied as well as they push back above 1.6%.
Sentiment on the LME was weaker today following the uninspiring data from China and softer SHFE performance. SHFE aluminium settled at RMB19,100/t and LME prices followed suit after failing above $2,700/t and closing at $2,657/t. Copper was marginally softer today, closing at $6,732/t but the cash to 3-month spread has also weakened to $32.5/t. Nickel failed above $20,030/t and closed at $19,594/t. Lead and zinc both weakened today closing at $2,318/t and $3,213/t respectively. All cash to 3-month spreads, except aluminium, are backwardated, but demand concerns from China and softer shipping rates may indicate weaker consumption.
Energy prices edged lower today after OPEC+ indicated there is no shortage of oil, with Russia suggesting inventories were rising despite OPEC+’s decision to maintain their current output. Brent trades at $81.12/bl and WTI at $79.79/bl, and we expect prices to remain above $80 in the near term. Precious metals were marginally softer today, but with European and U.K. inflation out this week, we expect gold and silver to catch another bid.
All price data is from 15.11.2021 as of 17:30
