Offshore RMB Strengthens, Overseas Market Metals Generally Rise, LME Copper Up 2.53%, Hong Kong and U.S. Stocks Climb [[Holiday Market Review]]

SMM May 6 News:

※Holiday Financial Market Performance

Metal Market:

Domestic Metal Market:

The domestic metal market was closed during the Labour Day holiday. A review of the market performance of domestic base metals on April 30 showed that all domestic metals fell: SHFE nickel dropped 0.61%, SHFE lead fell 0.59%, SHFE zinc declined 0.42%, SHFE tin decreased 0.35%, SHFE aluminum fell slightly, and the main alumina contract fell 2.81% on April 30. The ferrous metals series also declined on April 30, with coke leading the losses at 0.97%, while iron ore, rebar, HRC, stainless steel, and coking coal all fell within 0.8%.

Overseas Metal Market:

The London Metal Exchange (LME) market was closed on May 5 for the UK's early May bank holiday. During the Labour Day holiday, the LME market traded normally on May 1 and May 2. LME metals generally rose during the holiday, with LME copper leading the gains at 2.53%, followed by LME aluminum and LME zinc, which rose 1.78% and 1.34%, respectively. LME nickel increased 0.68% during the holiday. Both LME lead and LME tin fell, with LME lead dropping 0.67% and LME tin declining 1.48%.

Precious Metals:

During the Labour Day holiday, COMEX precious metals showed mixed performance, with COMEX gold rising 1.34% and COMEX silver falling 0.44%. Jim Wyckoff, Senior Analyst at Kitco Metals, said, "We are seeing continued safe-haven demand flows keeping gold prices elevated... At least in the short term, gold will trade above $3,000. I don't expect any changes in interest rates at this meeting, but we will be watching to see if the Fed has any particular leanings."

A report released by the World Gold Council showed that global gold prices hit record highs 20 times in Q1, leading to a 21% YoY decline in global gold jewelry consumption, the lowest level since 2020.

Goldman Sachs stated in a report on Monday that gold will continue to outperform silver, citing strong central bank demand for gold as a factor contributing to the structural rise in the gold-to-silver ratio. Therefore, the bank expects silver not to keep pace with gold's sustained rally. However, given the strong correlation in capital flows, a recovery in gold demand in 2025 could also boost silver prices. (Webstock Inc.)

Hong Kong Stock Market:

The Hong Kong stock market was closed on May 1 for Labour Day and on May 5 for Buddha's Birthday. During the Labour Day holiday, the market only traded normally on May 2. By the close on May 2, the Hong Kong stock market surged, with the Hang Seng Index closing up 1.74% and the Hang Seng Tech Index closing up 3.08%. Tech stocks rallied across the board, with Xiaomi Group rising over 6%, Alibaba up 3.8%, Tencent up 2.22%, and Kingsoft Cloud up over 4%. WuXi Biologics rose 5.7%, and MicroPort Scientific rose 5.82%.

US Stock Market:

During the Labour Day holiday, all three major US stock indices rose, with the Dow Jones gaining 1.35%, the S&P 500 rising 1.46%, and the Nasdaq increasing 2.28%.

Metal and Crude Oil Futures Quotes as of 8:35 AM on May 6

》SMM Metal Spot Prices on April 30

US Dollar:

During the Labour Day holiday, the US dollar index rose slightly by 0.15%, closing at 99.8 on May 5. The market is awaiting comments from Fed Chairman Powell on Wednesday for clues on the interest rate path. The Fed has maintained its policy rate in the 4.25%-4.50% range since December. It is expected that the Fed will keep rates unchanged at this meeting, but this may be the last time the outcome is so clear, as Trump's tariff policies have cast a shadow of uncertainty over the economic outlook. Trump's tariff policies are causing headaches for Fed officials, who are weighing the impact of tariffs on economic slowdown and rising inflation. Previously released data showed that the US economy contracted in Q1 for the first time since 2022.

US Dollar vs. Offshore Renminbi:

During the Labour Day holiday, the US dollar generally fell against the offshore renminbi, with a cumulative decline of 0.94% during the holiday. The US dollar fell to a low of 7.1846 against the offshore renminbi during the May 5 trading session and closed at 7.2010.

US Dollar vs. Offshore Renminbi Trend as of 8:42 AM on May 6

Other Currencies:

In Europe, the market expects the Bank of England to cut interest rates by 25 basis points this week, with Sweden and Norway also set to make interest rate decisions.

Macro: This week, data to be released include China's April Caixin Services PMI, the final UK April SPGI Services PMI, the Global Leading Indicator for Turning Points in the Industrial Production Cycle for April (irregular), the US March trade balance, the Canadian March trade balance, the Canadian April IVEY seasonally adjusted PMI, the Global Supply Chain Pressure Index for April, New Zealand's Q1 unemployment rate, New Zealand's Q1 labor force participation rate, China's April foreign exchange reserves, Russia's April SPGI Services PMI, France's March trade balance, the Eurozone's March retail sales MoM and YoY rates, the Canadian April leading indicator MoM rate, the upper and lower limits of the US May federal funds rate target, the Hong Kong SAR's May 8 base rate, Germany's March seasonally adjusted industrial production MoM rate, Germany's March working-day adjusted industrial production YoY rate, Germany's March seasonally adjusted exports MoM rate, the UK's May central bank benchmark interest rate, the US initial jobless claims for the week ending May 3, the US continuing jobless claims for the week ending April 26, the final US March wholesale inventories MoM rate, the US April New York Fed 1-year inflation expectations, the US April New York Fed 3-year inflation expectations, China's April trade balance, China's April export and import YoY rates, Switzerland's Q2 consumer confidence index (seasonally adjusted), China's April M2 money supply YoY rate, China's April social financing scale (year-to-date), China's April new RMB loans (year-to-date), changes in Canada's April employment, Canada's April unemployment rate, China's April PPI YoY rate, and China's April CPI YoY rate.

Notably: On May 6, the Dalian Commodity Exchange's call auction for all contracts will take place from 08:55-09:00 AM; night session trading will resume that evening. The Seoul Stock Exchange will be closed on May 6 for Children's Day. Also to be watched: The European Central Bank holds its Central Bank Forum until May 7; the Fed's FOMC announces its interest rate decision; Fed Chairman Powell holds a monetary policy press conference; the Bank of England announces its interest rate decision; Bank of England Governor Bailey delivers a speech; FOMC permanent voter and New York Fed President Williams delivers a keynote speech; Fed Governor Cook delivers a speech; 2025 FOMC voter and Chicago Fed President Goolsbee delivers a speech; Fed Governor Barr delivers a speech; FOMC permanent voter and New York Fed President Williams and Fed Governor Waller deliver a speech; 2025 FOMC voter and St. Louis Fed President Musalem, 2026 FOMC voter and Cleveland Fed President Hamrick, and Fed Governor Bowman deliver speeches at a panel meeting.

Crude Oil: During the Labour Day holiday, both WTI and Brent crude oil futures fell, with WTI dropping 1.7% and Brent declining 1.29%. OPEC's decision to accelerate production increases has sparked market concerns about a rise in global supply amid uncertain demand prospects, putting pressure on oil prices.

On Saturday, OPEC agreed for the second consecutive month to further accelerate oil production increases, with output rising by 411,000 barrels per day (bpd) in June. Production increases by eight OPEC members in June will bring the total production increase for April, May, and June to 960,000 bpd. Based on calculations, this means that 44% of the 2.2 million bpd in production cuts agreed upon through multiple agreements since 2022 have been unwound. OPEC sources said that if member countries fail to better comply with their production quotas, the organization may fully unwind voluntary production cuts by the end of October.

ING and Barclays also lowered their forecasts for Brent crude oil after OPEC's decision. Barclays reduced its 2025 Brent crude oil average price forecast by $4 to $66 per barrel and its 2026 forecast by $2 to $60 per barrel, while ING expects Brent crude oil to average $65 per barrel this year, down from a previous forecast of $70. Goldman Sachs stated in a report on Sunday that it had lowered its oil price forecasts following OPEC's decision to accelerate production increases. The bank now expects Brent crude oil to average $60 per barrel for the remainder of 2025 and $56 per barrel in 2026, down $2 from its previous expectations.