EUROPEAN COMMODITIES UPDATE: Commodities remain underpinned by the Fed’s pivot whilst industrials see further gains on upbeat Chinese Industrial Output

Analysis details (10:32)

• WTI Jan and Brent Feb futures hold a modest positive bias, in line with the broader risk tone, with prices also underpinned by firmer Chinese Industrial Output overnight and a flurry of geopolitical headlines this week, namely regarding shipping incidents near the Red Sea and Yemen. News flow this morning has been rather light in what has been a week dictated by major central banks, with the Fed option for a dovish pivot while the ECB and BoE were more reluctant to be as optimistic as the Fed. Chinese data overnight was mixed in which Industrial Production topped expectations, but Retail Sales missed. China’s Stats Bureau spokesperson said China's economy recovers as macro policy effects kick in, adding domestic demand is still not sufficient and economic recovery needs further consolidation. The morning saw the release of the European Flash PMIs, which offer anecdotal forward-looking commentary and essentially underscored higher prospects of a bloc-wide recession coupled with wage pressures. Conversely, the release for the UK was rosier and suggested the nation is poised to avoid a recession. Ahead, traders will be eyeing several central bank speakers including a number of ECB hawks and NY Fed President Williams on CNBC, whilst the weekly Baker Huges Rig Count is also slated for alter. It’s also worth being aware of a couple of shipping headlines this morning - the latest geopolitics reports suggested a cargo ship belonging to the German shipping company Hapag-Lloyd has been shot at and damaged in the Red Sea, whilst, in Europe, the Rhine River could reopen later this week following weather-related closures, according to a government official. WTI trades on either side of USD 72/bbl (USD 71.47-72.10/bbl range) while Brent oscillates around USD 77/bbl (USD 76.45-77.14/bbl range).


• Metals trade on a firmer footing, with spot gold holding a mild positive bias holding onto the post-FOMC gains and keeping its sight on the USD 2,050/oz level to the upside. The yellow metal is poised to close the week just under the psychological level, having risen from a pre-Fed weekly low of USD 1,973.09/oz to a weekly high of USD 2,047.93/oz. Spot silver regained status above USD 24/oz after finding support just under its 21 DMA (USD 24.03/oz). Base metal futures are firmer across the board after the Chinese Industrial Output data topped forecasts and reignited demand optimism for the sector, whilst prices continue to feel tailwinds from the Fed’s dovish pivot. 3M LME copper is back above USD 8,500/t in a USD 8,525-609/oz range. That being said, iron ore continued to decline overnight with traders citing China’s continued inspection into prices and the lack of details on stimulus from the Central Economic Work Conference.

15 Dec 2023 - 10:32- Fixed IncomeData- Source: Newsquawk