SHANGHAI, Oct. 30 (SMM) – LME lead started overnight at USD 2,031/mt, and then advanced to USD 2,043/mt, meeting resistance at the 20-day moving average. The price of the soft metal rose further to USD 2,046/mt subsequently, but fell to end down USD 4.3/mt at USD 2,029/mt following the release of the US Federal Reserve’s hawkish interest rate decision. Trading volumes gained 56 lots to 2,928 lots, but positions tumbled 1,110 lots to 116,832 lots. At the same time, LME lead inventories fell 75 mt to 224,475 mt.
Lead for December delivery on the Shanghai Futures Exchange, the most active contract, hovered between RMB 13,680-13,700/mt during Wednesday’s night session after opening at RMB 13,690/mt, and closed up RMB 15/mt at RMB 13,685/mt.
The US Fed announced the end of its QE3 program in the October FOMC meeting statement, but retained the stance of keeping interest rates low for a considerable time in the forward guidance. The Fed stated on balance, a range of labor market indicators suggests that under-utilization of labor resources is gradually diminishing, while warning downward risks in inflation in the short run. The tone of the Fed’s monetary policy statement was a bit more hawkish than the market was anticipating, pushing up the US dollar index sharply.
Following the results of Europe’s bank stress tests, there are growing calls for the European Central bank (ECB) to start buying sovereign bonds in an effort to prop up the region’s flagging recovery. Former ECB Governing Council member Athanasios Orphanides indicated that the ECB should have already started buying sovereign bonds or full-blown quantitative easing (QE).
Chinese Premier Li Keqiang announced on Wednesday at the executive meeting of the State Council to bolster consumption, further open up the financial markets, and encourage charity in a bid to stabilize the economy.
The US dollar index was up 0.68% after the Fed halted the QE stimulus. European and US stocks were mixed. LME copper and nickel fell on Wednesday, but other base metals closed higher.
Base metals markets will find direction from the Fed’s hawkish interest rate decision on Thursday. LME lead is expected to move between USD 2,020-2,040/mt, and the most active SHFE 1412 lead contract is set to hover between RMB 13,600-13,700/mt. Traded prices on China’s physical lead markets should range between RMB 13,600-13,700/mt on Thursday.