LME nickel prices supported higher on supply concerns

Tuesday, May 06, 2014

Three month LME nickel prices rallied higher during early morning trade today as concerns of flaring violence in Ukraine supported prices. After touching a 13-month high last week at $18,715/tonne prices briefly corrected towards $17,920 before finding stable support above $18,000 towards the end of last week. With Indonesia showing no indication of softening their stance on the export ban the supply outlook has been exacerbated by ongoing unrest between Russia and Ukraine. Imposition of tougher sanctions could support prices higher with the median estimate of 13 analysts surveyed by Bloomberg expecting prices to rally towards $22,000/tonne by the end of the year.

US stocks started the week on the front foot as investors were encouraged by positive services data. Both the ISM non-manufacturing composite and Market US services PMI indices rose higher in April, posting stronger readings of 55.2 and 55.0 respectively, well above expectations of 54.0 and 54.5. The positive surprise helped to counteract risk concerns in Ukraine and slowing growth in China. Both the DJIA and S&P 500 posted modest gains throughout the day despite financials heading lower after disappointing earnings released from JPMorgan Chase yesterday. Yields on 10-year Treasuries increased towards 2.61% yesterday after trading at their lowest levels since February towards the end of last week.

Despite the bullish tones in US equity markets spot gold prices rallied higher yesterday building on newly found support at the 200 day MA after struggling to breakout significantly above $1,300/oz throughout April. The yellow metal added 0.81% yesterday, experiencing strong buying pressure from the open as intraday moves tested resistance at the 50 day MA, currently at $1,316/oz. Activity early on this morning has seen prices open up around yesterday’s close at $1,310 in a relatively quiet start as investors anticipate UK and eurozone services PMI data due later this morning as well as US trade data expected this afternoon.  

Three month LME nickel prices rally higher on supply concerns

LMNIDS03 Comdty LME NICKEL 3 2014 05 06 07 22 17

ISM non-manufacturing index post surprise increase

NAPMNMI Index ISM Non Manufactu 2014 05 06 07 34 55

10-year US treasury yields bounce back from three month lows

USGG10YR Index US Generic Govt 2014 05 06 07 38 40

Spot gold prices rally higher on geopolitical tensions

XAU Curncy Gold Spot Oz D 2014 05 06 07 44 21


Events for today

JP Market Holiday 

0855

DE

Apr

Services PMI

0900

EZ

Apr

Services PMI

0930

UK

Apr

Services PMI

1000

EZ

Mar

Retail Sales

1330

US

Mar

Trade Balance

1500

US

May

IBD Sentiment

All times UK Local Time

Topics: Equities, Gold, PMI, LME, Nickel
More from: Kash Kamal