The base metal complex traded quite optimistic for the first day of the week on account of affirmative global equity markets and better than expected economic data releases. Even the rally of dollar index against the basket majors by 0.43% could not prevent the metals to trade higher. Nickel was the top performer gaining close to 4.50% on LME while 2.50% on MCX. Higher gains on the domestic front were curtailed by the rupee appreciation of 0.17%
On the fundamental front, Japan's aluminium products shipments dropped for a third month in May, although up from the same time last year, the slowing pace suggests demand from trading partners like China may be easing. Shipments of aluminium products rose 19.6 percent in May from a year earlier to 165,638 tonnes, marking the sixth straight month of Y/Y increase
Talking about the US data releases, the Personal income in May 2010 increased 0.4% from April 2010. Real personal consumption expenditures increased 0.3% and real disposable personal income (DPI) rose 0.5%. The personal savings rate as a percentage of DPI was 4.0% in May
Results of G20 summit: The leaders of the world's 20 top economies agree that they should cut their budget deficits without harming growth, defusing a potential row between Europe and the US. To sustain recovery, economies need to follow through on delivering existing stimulus plans. At the same time, recent events highlight the importance of sustainable public finances
OUTLOOK
China's appetite for base metals could ease in the H2-2010 due to Beijing's efforts to temper growth combined with tougher export market conditions. The government authorities are taking steps to cool the overheated sectors like property market, sparking concern the world's top consumer of metals may struggle to reach double digit GDP growth, after a rise above 11% in Q1-2010
Day ahead, market looks forward for a host of significant data releases from Euro-zone while consumer confidence data from the US. The confidence numbers from the Euro-zone for the June month pertaining to industry, consumer, services and economy are either staying at the prior levels or lowering down which might trigger some downside in the Euro vis-à-vis the dollar. However, the US consumer confidence numbers for the June month are also fading by one point to 62.5, causing some confidence lost in the US nation—a mirror impact of the Euro crisis looming over the nation as well
The Asian markets run low after the Wall Street ended in slight negative territories, on the previous day. Any weakness in the equity market during the day would instill some losses in the commodity markets as well
The dollar index, a performance track against the majors, continues to wade higher for the second consecutive day. Euro losing for the day might be a support for index to trade higher—weighing on the currency denominated commodities
We from KCTL expect MCX metals complex to open slightly low as suggested by weakness on the electronic session at LME. Deteriorating consumer confidence from the US is an indication of derailed economic recovery—lowering demand for the industrial metals. Moreover, investors would also be cautious of the disconcerting data releases in form of rising unemployment and falling non-farm payrolls in the later part of the week. Rise in dollar index and feeble equities also instill prices to wade low for the day. Overall trend for the day remains on the bearish side
