April 4th and April 6th coincided with the domestic Qingming holiday, and the internal disk was suspended from trading, and the external disk operated independently. SMM sorted out the changes in the rise and fall of the US dollar, crude oil and overseas LME metals from the night of April 3 to the overnight close of April 6, as follows:
In terms of the metal market:
During the Qingming holiday, the external metal collectively rose, among which London zinc rose the most, led by a rise of up to 2.7%, and London nickel rose by a total of 2.6% during the holiday, followed by London zinc. London lead rose 1.99%, and the rest of the base metals rose within 1%. Among them, London copper soared during the holiday, hitting a 14-month high of $9,397.5 on April 4, and the LME spot hit a record high of $118.75 compared with the discount of the benchmark three-month copper contract, up 5% weekly. This was mainly due to better-than-expected manufacturing activity data from China, a major metal consumer, and hopes of interest rate cuts in the United States and Europe boosting growth-dependent industrial metals. But then, better-than-expected U.S. job growth in March and a rise in the U.S. dollar dragged copper back from a 14-month high. London zinc rose 7.59% on a weekly basis, the biggest weekly gain since January 2023. London aluminum once rushed to 2461.5 US dollars / ton on April 4, a new high since April 2023, and London Xi rose to a high of 29045 US dollars / ton on April 5, a new high since July 2023.
In terms of precious metals, overseas COMEX gold futures rose 1.22% during the Qingming holiday, and once rose to a high of $2,350 per ounce on April 5, hitting a new record high, while COMEX silver rose 1.02%, and once rose to a high of $27.615 per ounce on April 5, a new high since June 2021.
As of Friday, April 6, the overnight closing market
Spot & Fundamentals
Copper: In the first quarter, the spot price of electrolytic copper formed a sharp stage contrast, with the Spring Festival as the boundary, the spot premium and futures structure before and after the holiday changed significantly, and the inventory destocking cycle and downstream consumption growth rate after the year were slower than in previous years. In recent years, under the continuous decline of social inventory, the social inventory has basically opened the inflection point of destocking since March of previous years, and the spot has entered the Shanghai copper 2404 contract quotation after it is mostly at a premium, and some holders have also begun to brew the "squeeze" sentiment in the market outlook, but this is not the case in 2024....
Aluminum: April is coming, the process of the traditional peak season of "Golden Three Silver Four" has also passed half, and the operating rate of aluminum downstream has continued to rise, driving the performance of domestic aluminum social inventory to improve, and the inflection point of aluminum ingot inventory has initially appeared at the end of March, and the performance of aluminum ingots to the warehouse this week has also continued smoothly. According to the latest statistics from SMM, on April 3, 2024, SMM counted the total social inventory of electrolytic aluminum ingots of 847,000 tons, and the domestic circulating electrolytic aluminum inventory of 721,000 tons, down 18,000 tons from last Thursday, and 24,000 tons of destocking after the inflection point of destocking.....
Macroscopic
Domestic:
According to the WeChat official account of the Voice of Culture and Tourism, during the 2024 Qingming Festival holiday, the national cultural and tourism market will be safe, stable and orderly. According to the data center of the Ministry of Culture and Tourism, there were 119 million domestic tourists traveling during the three-day holiday, an increase of 11.5% over the same period in 2019 on a comparable basis, and domestic tourists spent 53.95 billion yuan on travel, an increase of 12.7% over the same period in 2019.
China's GDP for the first quarter of 2024 is expected to be released in mid-to-late April, and this year's "Government Work Report" proposes that the main expected target for this year's development is to grow GDP by about 5%. As of the end of the first quarter, a number of economic data have been released since the beginning of the year, and indicators show that since the beginning of this year, the economy has rebounded for the better, and new drivers have been cultivated and strengthened, achieving a good start.
At the invitation of the U.S. side, Wang Shouwen, international trade negotiator and vice minister of the Ministry of Commerce, visited the United States from April 2 to 5 and co-chaired the first vice ministerial-level meeting of the China-US Commercial Working Group with U.S. Deputy Secretary of Commerce Lago. Focusing on the implementation of the important consensus reached at the San Francisco meeting between the two heads of state and the recent phone call, the two sides conducted objective, rational, professional and pragmatic communication on commercial and trade policy issues of concern to each other and specific commercial issues raised by the business circles of the two countries.
On the US dollar:
The U.S. dollar maintained a volatile trend during the Qingming holiday, falling in the first two trading days, and then rallied after the release of much higher-than-expected U.S. job growth, and finally closed up 0.03% during the holiday, but fell 0.2% on a weekly basis. Economic data from the US this week was mixed, with weak reports on service sector activity, strong manufacturing reports and non-farm payrolls data that also beat expectations. The U.S. dollar index hit its lowest level since March 21 at 103.910 on Thursday after data showed an unexpected slowdown in U.S. services sector growth, bolstering expectations of a Fed rate cut. Data released on Friday showed that U.S. employers hired much more workers than expected in March, potentially delaying the Federal Reserve's interest rate cut expectations this year. The U.S. Labor Department said in its closely watched jobs report released Friday that nonfarm payrolls rose by 303,000 in March. Economists had expected 200,000 jobs to be added, with specific forecasts ranging from 150,000 to 250,000.
According to CME Group's FedWatch tool, the U.S. interest rate futures market's forecast for a rate cut in June shrank to 54.5% following the release of the jobs report. Investors' expectations for the size of the Fed's rate cuts this year have weakened, with U.S. interest rate futures currently pricing in two rate cuts in 2024.
In terms of other currencies:
In Japan, Tatsuo Yamazaki, a former finance official at Japan's Ministry of Finance, said on Thursday that Japanese authorities continue to oppose the excessive weakness of the yen and that if the yen falls below 152 yen against the dollar, the Japanese authorities may intervene to buy the yen. Japanese Finance Minister Shunichi Suzuki reiterated on Friday that the Japanese government is determined to take appropriate action to prevent a sharp decline in the yen. Bank of Japan Governor Kazuo Ueda said the Bank of Japan (BOJ) could "adopt a monetary policy response" if the yen's weakness has an impact on the Japanese economy that is difficult to ignore, Asahi Shimbun reported on Friday. Kazuo Ueda also said inflation could accelerate from "summer to autumn" as generous wage increases push prices higher, his strongest hint to date that another rate hike could occur in the coming months.
EUR/USD surged as high as 1.0877 intraday on April 4, the highest since March 21, and Eurozone inflation reported on Wednesday was lower than expected, reinforcing expectations of a rate cut by the European Central Bank in June.
In terms of data:
There are a lot of macro highlights this week, China, will release the March CPI, PPI annual rate, March trade balance, import and export annual rate, crude oil imports, March new RMB loans, M2 money supply annual rate and other data; 1-year gold growth expectations, as of April 5 week crude oil inventory changes, the United States March import price index annual rate, April University of Michigan consumer confidence index preliminary data and other data; Euro area, will release the euro area April Sentix investor confidence index, April ECB main refinancing rate, April ECB deposit facility rate, ECB marginal lending rate and other data; Germany, will release the final value of Germany's March CPI annual rate, February seasonally adjusted industrial production month-on-month, seasonally adjusted trade balance, In the UK, the UK's GDP m/m, industrial production y/y, and seasonally adjusted trade balance for February will be released. France's trade balance for February, Switzerland's seasonally adjusted unemployment rate for March, Canada's central bank's overnight lending rate for April, and South Africa's gold production for February will also be released this week.
In addition, the Federal Reserve will release the minutes of its March monetary policy meeting at 2:00 a.m. this Thursday, the ECB will announce its interest rate decision, and ECB President Christine Lagarde will hold a monetary policy press conference. The Reserve Bank of New Zealand released its interest rate decision and monetary policy review report, Bank of Japan Governor Kazuo Ueda delivered a speech, the Bank of Canada released its interest rate decision and monetary policy report, and Bank of Canada Governor Macklem held a monetary policy press conference.
Crude oil:
Driven by geopolitical tensions, oil prices in the two cities rose one after another during the domestic Qingming holiday, rising to a new high since October 2023, of which U.S. oil rose 1.26% and cloth oil rose 1.45% during the holiday. Oil prices in both cities also rose more than 4% on a weekly basis, after rising geopolitical tensions between Iran, the third largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), and Israel raised concerns about further tightening of crude oil supply. And the 303,000 jobs in the U.S. added in March, suggesting that oil demand may be strong, but it may prompt the Federal Reserve to delay the rate cuts that are expected to begin this year. JPMorgan analysts said in a note that global oil demand is expected to rise by 1.4 million b/d in the first quarter.
In addition, energy services firm Baker Hughes said in its closely watched report on Friday that U.S. energy companies cut active oil and gas rig counts for the third straight week this week for the first time since October. The OPEC+ Joint Ministerial Monitoring Committee (JMMC) decided to keep oil policy unchanged and put pressure on some countries to increase the rate of implementation of the production cut agreement.