Negative and positive news keep metal prices in balance

Metal prices start the new trading week almost unchanged. Copper is trading at $6,700 per tonne, aluminum at $1,840 per tonne after its sharp rise on Friday. Price positive and negative news are balanced at the beginning of the week for metals. In many European countries new extensive lockdown measures are coming into effect these days, fuelling concerns that the economic recovery is being stalled and thus the demand for metals is also suffering. In addition, market participants are focusing their attention on the US elections that will take place tomorrow. If the outcome is close and the game hangs in the balance, uncertainty in the financial markets is likely to increase.

We believe that the higher risk aversion that can then be expected should also weigh on metal prices. On the other hand, they will be supported by good Chinese economic data: The official purchasing managers' index for the manufacturing sector (PMI) almost defended its level of 51.4 in October, while the PMI surveyed by Caixin even rose to 53.6, contrary to expectations. This reflects China's comparatively good situation and shows that China's economy is still on the road to recovery. In recent weeks, market participants have probably placed greater hopes on this and given a corresponding boost to metal prices, with the result that the LME Industrial Metals Index rose by 2.3% in October and more than made up for the decline in September. Today the ISM manufacturing index is being released in the US. We, like the Bloomberg consensus, expect a rise, i.e. according to this, the situation in US industry would also continue to brighten up, whereas there have recently been signs of slowdown in the service sector.

Source: Commerzbank Research, Photo: Fotolia