US Dollar Falls, Most Metals Fall, SHFE Nickel, LME Zinc, Tin, Nickel Fell Over 1%, COMEX Gold and Silver, SHFE Silver Declines Led the Drops [Overnight Market]

SMM July 29 News:

Metals Market:

Overnight, base metals generally fell across both domestic and overseas markets. On the domestic side, only SHFE aluminum and SHFE lead rose together, with SHFE aluminum up 0.99% and SHFE lead up 0.26%. SHFE nickel led the decline, falling 1.15%. On the overseas side, LME zinc, LME tin, and LME nickel all dropped more than 1%, with LME zinc down 1.31%, LME tin down 1.79%, and LME nickel down 1.88%. Declines for other metals fluctuated slightly. Alumina main contract rose 0.07%, and cast aluminum main contract rose 0.85%.

Overnight, ferrous metals generally declined. Hot-rolled coil was the only gainer, rising 0.03%. Stainless steel led the losses, dropping 0.55%. In coking coal and coke, coking coal fell 0.52% and coke fell 0.41%.

Overnight in precious metals, COMEX gold fell 1.18%, COMEX silver fell 2.35%. Domestically, SHFE gold fell 0.73%, and SHFE silver fell 1.43%.

As of 6:44 a.m. on July 29, overnight closing quotes:

Macro Front

Domestic:

[China's Tax Authorities Collected 16.7 Trillion Yuan in Tax and Fee Revenue in H1, with Tax Revenue Exceeding 10 Trillion Yuan] On the morning of July 28, the State Council Information Office held a press conference. A responsible official from the State Taxation Administration introduced that in H1, tax authorities collected a total of 16.7 trillion yuan in tax and fee revenue. Of this, tax revenue exceeded 10 trillion yuan, up 4.9% YoY. This was mainly attributable to the overall stable and improving economic performance, a continued rebound in PPI which is closely related to tax revenue, and strong growth momentum in some emerging sectors and key industries. Meanwhile, social insurance premium revenue reached 4.5 trillion yuan, and non-tax revenue reached 1.8 trillion yuan, further strengthening the country's fiscal resources.

US Dollar:

As of the overnight close, the US dollar index fell 0.11% to 101.42. As traders positioned for the possibility that the US Fed may begin raising interest rates on Wednesday, open interest in futures tied to the Fed's benchmark rate surged to a record high. The number of open contracts in federal funds rate futures, which will settle after this rate decision is announced, exceeded the previous record set by the October 2024 contract, when market disagreement over the Fed meeting outcome was also significant. CME data showed open interest reached 909,714 contracts on Friday and rose further to 967,136 contracts on Monday. This trading reflects significant divergence in market expectations for the Fed's next move. (from Wallstreetcn APP)

According to CME FedWatch: The probability that the Fed will keep rates unchanged in July is 69.5%, while the probability of a cumulative 25 bp rate hike is 30.5%. For September, the probability of unchanged rates is 23.4%, a cumulative 25 bp hike is 56.4%, and a 50 bp hike is 20.2%. (Jinshi Data APP)

A Huatai Macro research report said that since the new Fed Chair Kevin Warsh took office, financial markets' pricing of the new chair's policy stance has shifted from previous dovish rate cuts to a more hawkish near-term bias. However, approaching the July FOMC meeting, market expectations for the Fed's next policy move are extremely polarized. After Warsh abolished forward guidance, market pricing has become more difficult, and the focus of the tug-of-war between Warsh and the market is bound to shift from "listening to his words" to "watching his actions." Taking into account historical experience with Fed chair transitions, the current macro environment, and Warsh's goal of establishing credibility, we have brought forward our forecast for a Fed rate hike—we expect the probability of a July hike is slightly above 50%, higher than the roughly 40% currently priced in by the market, and in our base case, the probability that Warsh hikes before September is close to 100%. From the perspective of a new chair and market dynamics, the overall cost of hiking in July could be lower. (Jinshi Data APP)

On the Macro Front:

Today, data on Australia's unadjusted CPI YoY for June, Switzerland's July ZEW investor sentiment index, and UK mortgage approvals for June will be released. In addition, SK Hynix will report Q2 earnings.

Crude Oil:

As of the overnight close, both benchmark oil prices fell, with WTI down 4.21% and Brent down 3.33%. The market is waiting for the US and Iran to push forward peace negotiations, though the dispute over the Strait of Hormuz remains unresolved. However, early this morning, oil prices surged again, with foreign media reporting that the tentative ceasefire between the US and Iran has once again become uncertain.

Data from the American Petroleum Institute (API) showed that last week, US API crude oil inventories fell by 3.296 million barrels, following an increase of 2.603 million barrels the previous week. API Cushing crude oil inventories fell by 273,000 barrels, versus a prior decline of 737,000 barrels. API gasoline inventories rose by 918,000 barrels (previous: -1.379 million barrels), and distillate inventories rose by 355,000 barrels (previous: +1.759 million barrels). (Wallstreetcn)