Against the Grain

A late sharp rally in US equities lifted the metals in Asia though one gets the feeling there is a wariness creeping in about slavishly following the path of equities as they tend to be leading nowhere. The Oct US NAHB housing index was 14 (17) continuing the flow of poor economic data. In Asia the Aug Japanese tertiary industry index fell 1.4% (Jul +1.2%) and Spt Singapore non oil domestic exports fell 5.7% not as harsh as anticipated (Aug -13.9%) electronics fell 10.7% and pharmaceuticals 28.7%. The weekly Shanghai stocks saw cu rise 9100 tonnes to 34,781; al fell 850 tonnes to 204,681 and zn off 90 tonnes at 72,526.

The LME stocks were again dominated by al which rose 11,800 tonnes Rott took in 5100 and Korea 4900. Over the week cu increased 2 kt; al jumped 86 kt; zn rose 4 kt; pb fell 3.5 kt; ni up 618 tonnes and sn declined 500 tonnes. European equities gave a luke warm reception to the DJI rally and while moving sharply higher on the open soon drifted. News that OPEC was discussing an early meeting to discuss output levels after the recent oil price fall took crude back above US$ 70 / bbl. In the equities the vultures seem to have singled out another target as the Dutch financial services group was market down 25% on worries it will need to raise capital. A major Chinese shipper forecast container traffic could drop 10% over the next year, the first decline in 4 years as a higher currency and lower exports bite.

More poor US data Spt housing starts fell 6.3% to 817 k units (Aug -6.2% to 895 k units) and building permits off 5.8% to 786 k units (-8.5% at 857 units). At 15:00 the preliminary Oct Uni of Michigan consumer sentiment index slumped to 57.5 expected 65 (final Spt 70.3). It has been a very poor week for US data in the retail and housing sectors which raises worries about whether Main Street can with start the Wall Street storm. The metals followed the equities higher in what could be book squaring ahead of any weekend surprises.

After all the volatility the weekly changes might surprise you; cu up 6, al drifted 5, zn fell 220, pb down 15, ni off 1775, sn declined 750, gold dropped US$ 110 / oz, oil fell US$ 8 / bbl, DJI up 900 points and US 10 year bond yields up 0.11%.