The exception to the stronger showing by the LME base metals was lead, which was down by 0.7%. The rest of the complex saw of gains of between 0.1% for tin and 0.7% for zinc, with copper up by 0.2% at $5,964 per tonne.
Volume across the complex has been above average with 9,815 lots traded as at 07.02am London time.
The precious metals were firmer with gold and silver prices up between 0.1% and 0.2% with spot gold at $1,199.45 per oz, while platinum prices were up by 0.9% and palladium prices were up by 0.3%.
In China, base metals prices were mixed on the Shanghai Futures Exchange, November copper and zinc were up by 0.7% and 1.5% respectively, with copper at 48,480 yuan ($7,060) per tonne, while the rest were down between 0.2% for tin and 1.3% for nickel.
Spot copper prices in Changjiang were up by 1.3% at 48,710-49,030 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.11.
In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was up by 1% at 506.50 yuan per tonne. On the SHFE, the January steel rebar contract was up by 0.6%, while the December gold and silver contracts were little changed.
In wider markets, spot Brent crude oil prices have weakened and were recently quoted at $77.67 per barrel, down by 0.33% this morning. The yield on US 10-year treasuries was at 3.0044%, and the German 10-year bund yield was at 0.4600%.
Asian equity markets were for the most part stronger on Tuesday, again suggesting the tariff changes could have been worse: Nikkei (+1.41%), Kospi (+0.26%), the Hang Seng (+0.19%) and the CSI 300 (+1.52%), although the ASX 200 was down 0.38%. This follows a mixed performance in western markets on Monday; in the United States, the Dow Jones closed down by 0.35% at 26,062.12, while in Europe the Euro Stoxx 50 closed up by 0.04% at 3,346.11.
The dollar index is under pressure and is looking vulnerable. It was recently quoted at 94.44, with recent support in the 94.35 to 94.43 range. A break lower could lend support to the metals, many of which seem to be looking for an excuse to rally from oversold levels.
With the dollar weaker, most of the other major currencies we follow are either climbing, or looking to push through resistance: sterling (1.31.58), the euro (1.1705), the Australian dollar (0.7215), although the yen is weakening 112.21.
The yuan is treading water around recent levels and was recently quoted at 6.8359 and most of the emerging market currencies we follow are consolidating after their recent significant weakness.
The economic agenda is light today with data on US housing and long term treasury international capital (TIC) purchases. In addition, European Central Bank President Mario Draghi is speaking.
The base metals seem to be base building. The lows in mid-August were followed by rebounds that stalled and prices have since retreated to test the quality of underlying buying, which seems to be good, as for the most part the support levels have held. The exception has been nickel, where the August lows gave way.
The fact the dollar is looking weak and the market has not yet had too negative a reaction to the latest round of tariff increases, suggests a lot of the bad news is in the price, although should China retaliate the market may think again. Until the trade disputes are settled, which may not be until after the US mid-term elections, it may be hard for the metals to reflect their tightening fundamentals. As such for now, we expect choppy trading with attempted rallies, short-covering and further shorting into strength.
Longer term, we do favor the upside from these levels.
Gold prices have followed in the tracks of the base metals and prices are consolidating above recent lows, as are platinum prices. Palladium prices are showing relative strength in line with their fundamentals, while silver continues to struggle with the gold/silver ratio out at 84.8.