London 31/08/2012 - Base metals were quiet during Friday morning LME trading, with thin volumes trading on Select as investors stood firmly on the sidelines ahead of this afternoon’s speech by Ben Bernanke. Volumes on Select are stagnant, with just 10,250 lots changing hands across the entire complex.
"The markets are still awaiting Jackson Hole...Overall, poor and weak news out of Europe and the US should keep markets sideways to lower," a trader said.
Investor nervousness has grown ahead of Federal Reserve chief Ben Bernanke’s speech at Jackson Hole later on Friday. The meeting, which begins today and will run until Saturday, could provide the platform for Bernanke to announce a third round of quantitative easing (QE3).
But there is a risk of disappointment and, should no QE3 be announced, sentiment could turn more bearish.
“The metals are well placed to rally, but with so much talk of stimulus and so little action of late, there may well be room for disappointment and the markets may start to demand action by showing their disappointment,” said FastMarkets analyst William Adams.
As well, financial markets will focus on the release of China's official manufacturing PMI on Saturday. A weak reading would increase downside risks, but there is a possibility that China will pre-empt a disappointing result with an announcement of monetary easing.
For today, US data releases include the August Chicago PMI, the August Revised UoM Consumer Sentiment index and Inflation Expectations, and July factory orders.
In other markets, the euro was stable in the wake of Thursday's late losses, trading around 1.2550 against the dollar, which helped stabilise metals. Tomorrow ECB president Mario Draghi will outline the bank's plans to save the struggling eurozone, with particular focus on government bonds.
Trading this morning is expected to remain low-key, before activity and movements pick up towards the close and ahead of the three-day US weekend - markets there are closed on Monday for Labour day.
PRICES SUBDUED, LEAD WARRANT CANCELLATIONS UP
Copper was steady at $7,590 per tonne, an increase of $20, while inventories were down for the fifth consecutive day, losing a net 275 tonnes to 229,900 tonnes. Cancelled warrants were marginally up, rising 25 tonnes to 36,925 tonnes.
Lead business at $1,961.25 was up $17.25. The metal saw a large increase in cancelled warrants this morning, rising 35,900 tonnes to 114,025 tonnes. The increase was due to a 29,075-tonne rise in Singapore. This location holds 45,250 tonnes of lead, of which 96 percent or 43,525 tonnes is metal booked for removal. Total stocks at 310,225 tonnes were down 1,250 tonnes.
Aluminium at $1,870 slipped $6. Stocks lost 8,900 tonnes to 4,870,050 tonnes, with only Rotterdam posting an increase. Rotterdam inventories were up 3,000 tonnes to 540,925 tonnes, of which 7,325 tonnes are cancelled warrants. Total cancelled warrants at 1,691,150 tonnes were down 5,275 tonnes.
Nickel has clambered above $16,000, now at $16,075, a $100 increase, while stocks rose 246 tonnes to 118,908 tonnes and cancelled warrants dipped to 14,298 tonnes. Zinc inched $1 higher to $1,835 - stocks fell 2,550 tonnes to 951,100 tonnes, while cancelled warrants at 14,298 fell 306 tonnes.
Tin business at $19,600 was unchanged from yesterday’s close, as were inventories at 11,635 tonnes. Cancelled warrants fell 25 tonnes to 5,460 tonnes.
Steel was offered at $385 while stocks continued their decline, dropping a further 1,430 tonnes to 50,570 tonnes, while cancelled warrants declined 1,430 tonnes.
In minor metals, cobalt was indicated at $29,000/30,000 while Molybdenum was neglected. Molybdenum saw a six-tonne stock withdrawal from Rotterdam, taking total stocks to 216, none of which are cancelled warrants,
(Editing by Martin Hayes)