EUROPEAN COMMODITIES UPDATE: Industrial commodities trim APAC losses while gold trades on either side of USD 1,950/oz

Analysis details (10:01)

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  WTI and Brent August futures have trimmed APAC losses in early European trade – weakness that emanated from Chinese growth concerns, whilst the PBoC opted to cut its Loan Prime Rates, although the cut to the 5yr was shallower than markets had expected. Desks have continued to downgrade China’s 2023 GDP growth forecast – with HSBC the latest to join the likes of Citi, Nomura, and Goldman Sachs, whilst most analysts, including ING, anticipate more rate cuts to follow, suggesting that “more will likely follow in the months ahead as the economy continues to struggle”. The benchmarks have trimmed the losses seen overnight in tandem with a slight recovery in risk at the time. WTI and Brent futures reside around USD 71.75/bbl (vs low 70.82/bbl) and USD 76.50/bbl (vs. low 75.60/bbl) respectively, with intraday price changes slightly out of sync amid the lack of WTI settlement yesterday amid the Juneteenth market holiday. Traders are looking ahead to a slew of risk events this week including Flash PMIs, the BoE, and Powell’s testimony.


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  Gas prices are firmer on both sides of the pond, with US Henry Hub +1.5% at the time of writing, while Dutch TTF July rises over 5% to levels near EUR 37/MWh vs EUR 23.10/MWh on June 1st. Desks suggest the recent volatile price action in the gas market also comes as European nations replenish inventories during the summer to accommodate winter demand. Analysts remind us that last summer, the gas market rallied some 340% from its June lows to its record highs in August – although this was amid the back of the energy fallout from the Russia-Ukraine conflict.


• Spot gold is caged to a tight range as DXY price action remains modest this morning. The yellow metal trades on either side of the USD 1,950/oz mark and within recent ranges, with technicians keeping eyes on the 100 DMA to the downside at USD 1,942.34/oz, whilst upside levels above recent ranges include the 50 DMA at USD 1,983.32/oz. Price action could be limited ahead of this week’s aforementioned risk events. Base metals markets remain subdued from the APAC hangover amid concerns surrounding China’s economic recovery, whilst the 5yr LPR saw a shallower-than-expected cut; nonetheless, LME copper is back above USD 8,500/t and towards the middle of today’s USD 8,478-8,551/t.

20 Jun 2023 - 10:04- Research Sheet- Source: Newsquawk