The $2-trillion economic stimulus package approved by the United States Senate late on Wednesday and expectations of a coordinated response from Group of 20 (G20) nations to combat the Covid-19 pandemic has provided a boost to sentiment across a broad range of markets this morning.
G20 leaders on Thursday pledged to inject $5 trillion into the global economy to counter the negative economic impact of the coronavirus pandemic.
“We are strongly committed to presenting a united front against this common threat,” G20 leaders said in a joint statement.
US Federal Reserve Chairman Jerome Powell also reassured the market on Thursday, saying that the central bank would keep supplying credit “aggressively and forthrightly” and that “when it comes to this lending we’re not going to run out of ammunition”.
US equities rallied in response; the Dow Jones Industrial Average closed up by 6.38% or 1,351.62 points at 22,552.17 on Thursday, the S&P 500 rose by 6.24% or 154.51 points to 2,603.07 and the Nasdaq Composite closed up by 5.60% or 413.24 points to 7,797.54.
Asian equities were also stronger as of shortly before noon Shanghai time on Friday; China’s Shanghai Composite Index rose by 1.41% or 39.07 points to 2,803.99, Japan’s Nikkei ticked up by 1.88% or 351.12 points to 19,015.72, and Hong Kong’s Hang Seng Index was up by 0.95% or 221.87 points to 23,574.21.
Against this more broadly positive backdrop and various production cut announcements, the SHFE base metals were up across the board at the close of morning trading on Friday.
Zinc was the outperformer of the complex in terms of percentage gains, with its most-traded May contract at 15,245 yuan ($2,150) per tonne, up by 2.6% or 385 yuan per tonne from Thursday’s close of 14,860 yuan per tonne. The May contract for sister metal lead was close behind with a 2.4% gain to 13,854 yuan per tonne.
“Concerns over supply disruptions are pushing up zinc and lead prices, a key factor for today’s gains,” a Shanghai-based zinc and lead analyst told Fastmarkets.
Sumitomo Corp announced on Thursday that it is temporarily halting operations at its Minera San Cristobal zinc-lead mine in Bolivia
due to national restrictions imposed to contain the spread of the Covid-19 virus.
Also on Thursday, Sumitomo Corp said the Ambatovy Nickel Project in Madagascar would also temporarily stop operations
Gains were seen throughout the rest of the SHFE base metals this morning: June nickel at 93,010 yuan per tonne (+1.6%), June tin at 117,720 yuan per tonne (+2%), May aluminium at 11,705 yuan per tonne (+0.6%) and May copper at 39,080 yuan per tonne (+0.5%).
- The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, fell by 0.27% at 99.03 as at 12.40am Shanghai time. This is down from a peak of 103 on March 20.
- Chinese industrial profits fell by 38.3% year on year to 410.7 billion yuan in January and February, the country’s National Bureau of Statistics said on Friday.
- In a light day for data on Friday, the US will publish personal income and spending, core personal consumption expenditures (PCE) price index and University of Michigan consumer sentiment.