Monday, June 1, 2020

All That Glitters Is Silver?

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News shaping
the markets today

     

What’s happening: Silver futures rose on the last trading day in May, recording a monthly gain of around 24%.

What happened: Silver prices managed to breach the psychological barrier of $18 last month and continued its upward momentum. The surge was supported by a weaker US dollar and rise in gold prices.

The industrial metal continued to find support due to growing tensions between the US and China and stimulus measures announced by various countries to prevent their economies from spiralling into a coronavirus-led recession.

Investor sentiment for silver remains positive with major economies recently easing their covid-19-related restrictions to get their economies back on track.

Details: Silver futures settled higher on Friday to post strong gains for the month, with the metal price delivering its strongest rally since 2011. The US dollar continued to slide versus a broad basket of other major currencies, despite being considered a safe-haven asset. Gold futures also climbed higher on Friday, driven by tensions between Beijing and Washington.

July silver rose 3% to settle at $18.499 an ounce on Friday, while August gold gained 1.4% to $1,751.70 an ounce. Gold prices recorded gains of 3.4% for the month.

Why it matters: Silver prices are expected to depend on the relations between the US and China. Investors were closely monitoring US President Donald Trump’s news conference on China on Friday, expecting strong moves against the Asian nation. However, President Trump didn’t announce any moves related to trade tariffs and, instead, announced plans to cut ties with the World Health Organization.

Various other countries, including Australia, Britain and Canada, also issued statements expressing concerns over China’s decision of imposing a national security law in Hong Kong.

As of Wednesday, the Federal Reserve’s balance sheet had grown to $7.1 trillion, from $7.04 trillion in the previous week, with the central bank continuing to support markets amid the pandemic.

Traders also monitored recent economic data, including the US reporting a rise in personal income by 10.5% in April, due to the government’s covid-19 payments. The University of Michigan’s consumer confidence index also climbed to 72.3 in May, from a final reading of 71.8 in April. 

Among other metals, July copper rose around 0.5% on Friday to record a monthly gain of around 4%. July platinum rose 7.7% for the month, while September palladium slipped 0.5%.

Silver futures were trading higher by 0.7% at $18.635 an ounce at 3am GMT, while gold futures were down by 0.1% at $1,750.70 an ounce.

The Markets Today

     

The European markets will be in focus today, ahead of manufacturing PMI data scheduled to be released later in the day.

Context: European stocks closed lower on Friday, with growing US-China tensions overshadowing prospects for an economic recovery as businesses restarted their operations with easing lockdown restrictions. Investors remained cautious ahead of the US President’s press conference on China.

Details: President Donald Trump has been blaming China for its way of handling the covid-19 pandemic, which led to tensions between the world’s two largest economies. Tensions escalated after Beijing planned to impose a security law on Hong Kong.

Investors were fearing the US imposing sanctions on China, which would cause further damage to an already battered global economy.

Closer to home, Germany recorded its biggest decline in retail sales since 2007, with most stores remaining closed in April due to the coronavirus outbreak. The French economy shrank 5.3% in the first quarter, while Eurozone’s inflation tumbled to a four-year low level of 0.1% in May.

The pan European Stoxx 600 index shed 1.44% on Friday but managed to record strong gains last week. The FTSE 100 declined by 2.3% in Friday, while the German 30 slipped 1.65%.

TUI’s shares plummeted 14% on Friday, after the stock made strong gains earlier in the week. Shares of Renault fell more than 7% after the company disclosed plans to lay off 15,000 employees.

What to watch: Traders will be watching manufacturing PMI data from the Eurozone and the region’s nations. The IHS Markit manufacturing PMI for the Eurozone is expected to surge to 39.5 in May, from a reading of 33.4 in April.

Investors will continue to monitor the daily coronavirus cases, with the number of infections reaching 6,164,780 globally. The UK has confirmed over 276,150 cases with around 38,570 deaths, while the number of cases in Spain rose to 239,470.

Other Markets: US indices closed mostly higher on Friday, with the S&P 500 and Nasdaq 100 up by 0.48% and 1.29%, respectively. The Dow bucked to trend to move lower by 0.07%.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Russia’s manufacturing PMI, Spain’s tourist arrivals, manufacturing PMI and new car sales, Turkey’s manufacturing PMI, Italy’s manufacturing PMI, France’s manufacturing PMI, Germany’s manufacturing PMI, the UK’s manufacturing PMI, South Africa’s manufacturing PMI, consumer confidence and total vehicle sales, Mexico’s business confidence and manufacturing PMI, Brazil’s manufacturing PMI and balance of trade, Canada’s manufacturing PMI as well as the US manufacturing PMI, ISM manufacturing index and construction spending.