LME aluminium extends gains on ISM manufacturing data

Wednesday, September 03, 2014

Three month LME aluminium prices close higher for the seventh straight session on Tuesday as prices found fresh support from a stronger than expected ISM manufacturing reading. Three month futures traded as high as $2,119/tonne before paring some early gains to close above $2,100 for the first time since February 2013 after the ISM manufacturing index rose to 59.0 from 57.1 in August, exceeding expectations once again. With the pace of US manufacturing growing at its fastest pace in three years aluminium futures could be supported further on the upside, adding to the 17.5% year-to-date gains. Growth in auto sales and industrial machinery has seen labour market conditions in the US improve drastically with faster wage growth now needed to sustain further growth and accelerate household spending.

Spot gold prices fell 1.6% yesterday as stronger US macro data prompted the largest one day drop since July 14th. After struggling to hold on to tentative support at the 200 day MA throughout the end of the previous week and beginning of this week the yellow metal sold off towards $1,265/oz after positive US construction spending and ISM manufacturing data. The price drop was further exacerbated by dollar strength with the dollar index rallying briefly above 83.00 for the first time since July last year before ending the session at 82.992.

Asian stocks climbed overnight on a combination of US data and China’s services PMI as benchmark stock indices in the region built on recent gains. HSBC’s services PMI reading for August posted substantial gains over the previous month coming in at 54.1 from 50.0 in July, spurring the Shanghai Composite to rally higher for the fourth straight session as it tested levels towards 2,290. The yen touched levels towards an eight month low overnight as investors sought higher yielding assets, trading around 105.31 early on before recovering back below 105.00 nearing the close of the Asian session.

Cargill has agreed to buy ADM’s chocolate business for $440m as it moves to expand capacity in North America. The move is Cargill’s largest effort to increase the footprint of its chocolate making business with the deal expected to close in the first half of 2015 and comes at a time when cocoa futures have risen 16.7% so far this year after adding 5.3% and 20.6% in 2012 and 2013 respectively.

LME aluminium prices rally higher on ISM manufacturing reading

 LMAHDS03 Comdty LME ALUMINUM 3 2014 09 03 07 31 55

Manufacturing growth in the US at its fastest pace in three years

NAPMPMI Index ISM Manufacturing 2014 09 03 07 37 41

Shanghai Composite extends gains on bullish data

SHCOMP Index Shanghai Stock Exc 2014 09 03 07 50 10

Events for today

0200

CN

Aug

Non-Manufacturing PMI

0245

CN

Aug

HSBC Services PMI

0855

DE

Aug

Markit Services PMI

0900

EZ

Aug

Markit Services PMI

0930

UK

Aug

Markit/CIPS Services PMI

1000

EZ

Jul

Retail Sales

1000

EZ

Q2

GDP

1445

US

Aug

ISM-NY Fed Index

1500

US

Jul

Factory Orders & Durable Goods

Topics: Gold, Aluminium, JPY, DXY, LME, Cocoa
More from: Kash Kamal