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Morning Bid: Metals zoom as investors wait on rates

Published 20/05/2024, 02:31 pm
© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 17, 2024. REUTERS/Staff/File Photo
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A look at the day ahead in European and global markets from Tom Westbrook

Copper and gold made record highs in Asia trade on Monday and silver surged over $30. The breakout gains were all the more noteworthy while bonds and currencies settled into ranges and with uncertainty rather than optimism on the outlook.

World stocks, meanwhile, were parked just below last week's record peak.

Gold's 18% rally over the year to date has been attributed, variously, to Chinese buying, global political tension and expectations that U.S. rates will start to fall soon, seen as a boon for a metal that does not pay a yield at all.

Copper is soaring on China's strongest efforts yet to dig its property market out of a funk.

On Friday, officials promised a trillion yuan in funding for affordable housing and redevelopment and said local governments would step in as buyers. Much is unclear, such as the effect on real estate prices, and developer stock prices wobbled through Monday.

But the macro signal has been enough to put the blowtorch on copper short sellers.

Last week Reuters reported that traders Trafigura and IXM were looking for physical copper to deliver against large short positions in Chicago futures. Trading volumes have spiked in Shanghai and London and silver is along for the ride, gaining 3% in Asia to shoot over $30 an ounce.

On Monday, oil prices made no immediate reaction to reports of a helicopter crash which an Iranian official said killed Iran's president and foreign minister.

The week ahead is light on top-tier data but holds preliminary PMI figures, minutes from the Federal Reserve and Nvidia earnings along with a number of policymaker speeches, led by Fed Vice Chair Philip Jefferson on Monday.

Bonds rallied and the dollar fell last week after U.S. inflation slowed, as expected. But Treasuries retraced, and yields rose on Friday, while the dollar found some support as investors wait for more data to chart economic outlook.

Minutes from the Fed this week and Australia's central bank will likely show central bankers are playing for time.

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 17, 2024. REUTERS/Staff/File Photo

Key developments that could influence markets on Monday:

Speeches: Fed's Jefferson, Riksbank's Jansson and Thedeen, BoE's Broadbent

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