US Dollar Fell, Crude Oil Dropped Over 6%, Domestic Market Metals Generally Rose, Alumina Up Nearly 5%, Coking Coal Up Over 9% [Overnight Market]

SMM May 26 News:

Metals Market:

Overnight, domestic base metals generally rose. SHFE copper was up 0.39%. SHFE aluminum was down 0.29%, and SHFE lead was down 0.27%. SHFE zinc was up 0.62%. SHFE tin was up 0.52%. SHFE nickel was up 0.42%. In addition, the most-traded alumina futures contract was up 4.82%, while the most-traded casting aluminum continuous contract was down 0.26%.

Overnight, ferrous metals showed mixed performance. Iron ore was down 0.94%, stainless steel was up 0.13%, rebar was down 0.75%, and hot-rolled coil was down 0.73%. Coking coal and coke: the most-traded coking coal futures contract was up 9.05%, and the most-traded coke futures contract was up 5.04%.

Overseas metals: The London Metal Exchange (LME) was closed on May 25 for the UK bank holiday and will resume trading on May 26.

Overnight Precious Metals:COMEX gold was up 1.11%, and COMEX silver was up 2.89%. Overnight, SHFE gold continuous contract was up 0.71%, and SHFE silver continuous contract was up 1.62%.

UBS Group analyst Staunovo Giovanni noted: "Currently, financial asset movements are heavily influenced by oil prices, and gold is naturally no exception." Staunovo further explained: "Falling oil prices are bullish for gold, as the market expects lower oil prices to impact the US Fed's monetary policy." He added that this trend is expected to continue in the near term. (Jin10 Data)

As of 7:17 AM on May 26, overnight closing prices:

Macro Front

China:

[National Energy Administration: As of End of April, China's Cumulative Installed Power Generation Capacity Reached 3.99 Billion kW, Up 14.2% YoY] The National Energy Administration released national electricity statistics for January-April. As of the end of April, China's cumulative installed power generation capacity reached 3.99 billion kW, up 14.2% YoY. Among them, solar power installed capacity was 1.25 billion kW, up 26.2% YoY; wind power installed capacity was 660 million kW, up 22.0% YoY. From January to April, the cumulative average utilization hours of national power generation equipment were 925 hours, down 84 hours from the same period last year.

US Dollar:

Overnight, the US dollar index fell 0.34% to 98.98. The US dollar and oil prices pulled back as the market hoped for a peace deal to end the Iran conflict, easing concerns about rising inflation and interest rates "staying high for longer." Despite both the US and Iran downplaying the likelihood of a near-term deal, market sentiment remained optimistic. Additionally, according to the CME "FedWatch": the probability of the US Fed keeping rates unchanged through June was 99.9%, with a 0.1% probability of a cumulative 25 basis point interest rate cut. The probability of the US Fed keeping rates unchanged through July was 90.3%, with a 9.6% probability of a cumulative 25 basis point rate hike and a 0.1% probability of a cumulative 25 basis point interest rate cut. (Jin10 Data)

BlackRock stated that under new US Fed Chair Warsh's leadership, the US Fed may have sufficient reason to support an interest rate cut rather than a hike. Navin Saigal, BlackRock's Asia-Pacific head of global fixed income, responded to a question about the probability of a rate hike under Warsh's tenure: "If I had to choose between a hike and a cut, I think there are actually ample factors to support a cut." "Looking ahead, the labour market is expected to face some pressure, which may signal that the US Fed will either hold steady or cut interest rates." Saigal's remarks contrasted with the prevailing expectations of bond investors, who bet that Warsh would prioritize safeguarding the US Fed's credibility in fighting inflation over accommodating US President Trump's calls for lower interest rates. Current pricing shows the market is nearly certain the US Fed will raise interest rates before December.

On the macro front:

Data to be released today include the UK May CBI retail sales balance, US March FHFA house price index MoM, US March S&P/CS 20-city non-seasonally adjusted home price index YoY, US May Conference Board consumer confidence index, and US May Dallas Fed business activity index. In addition, attention should be paid to: Xiaomi Group's earnings call.

Crude Oil:

Overnight, both oil futures fell sharply, with WTI crude down 6.52% and Brent crude down 6.56%. Rising expectations of US-Iran peace talks drove crude oil prices sharply lower. According to Xinhua News Agency, Trump posted on social media on Monday the 25th that negotiations with Iran were progressing well, emphasizing that either "a great and meaningful deal" would be reached with Iran, or "there would be no deal." According to CCTV News, an Iranian delegation appeared in Qatar on Monday the 25th, including senior members of Tehran's negotiating team, which was viewed by the US side as a positive signal.

Bloomberg's Garfield Reynolds noted that US crude oil inventories were declining at an unprecedented pace, highlighting the importance of a US-Iran deal this weekend for global markets. However, both the US and Iran remained cautious about the prospects for a deal. An Iranian Foreign Ministry spokesperson said that many issues in the potential bilateral memorandum had reached preliminary conclusions, but this did not mean Tehran was close to signing an agreement. (Wallstreetcn)