US retail sales growth slowed down in April, US dollar fell, metals showed mixed performance, and gold price rose over 1% [Overnight Market]

SMM, May 16:

Metal Market:

Overnight, metals in both domestic and overseas markets showed mixed performance. LME zinc and LME aluminum both fell by over 1%, with LME zinc down 1.41% and LME aluminum down 1.17%. The percentage changes of other metals were all within 1%. The main alumina futures contract rose by 0.17%.

The ferrous metals series collectively declined, with iron ore down 0.75%, HRC and rebar both falling by over 0.2% (rebar down 0.29%, HRC down 0.21%). In the coking coal and coke sector, coking coal fell by 2.48% and coke by 1.22%.

In precious metals, overnight COMEX gold rose by 1.74% and COMEX silver by 1.07%. Domestically, SHFE gold rose by 1.22% and SHFE silver by 1.02%.

As of the overnight market close at 6:45 a.m. on May 16

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Macro Front

Domestic Developments:

On May 15, the State Council convened a meeting to advance the work of strengthening the domestic economic cycle. Li Qiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, emphasized at the meeting that the strategic foothold of development should be placed on strengthening the domestic economic cycle, leveraging its inherent stability and long-term growth potential to hedge against uncertainties in the international cycle, thereby promoting steady and sustained economic growth in China and striving to achieve high-quality development. Li Qiang pointed out that a domestic demand-led and internally circulated economy is a unique advantage of a large economy. Efforts should be made to place strengthening the domestic economic cycle in a more prominent position in accelerating the construction of a new development paradigm.

The General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Continuously Promoting Urban Renewal Actions." The opinions propose advancing the renovation of old urban residential communities, steadily promoting the renovation of dilapidated housing, accelerating the demolition and renovation of Category D dilapidated housing, strengthening the renovation of urban infrastructure, and advancing the construction of new-type urban infrastructure. The central government's fiscal support should be provided for the implementation of urban renewal actions, and various financial institutions are encouraged to actively participate in urban renewal on the premise of compliance with laws and regulations, risk controllability, and commercial sustainability.

US Dollar:

After the US released a series of economic data overnight, the US dollar index fell by 0.26%. This data included an indicator measuring consumer health, which showed that retail sales growth slowed in April as the uncertain economic outlook affected consumer confidence. Data released on Thursday showed that US producer prices (PPI) unexpectedly fell in April, and retail sales growth also slowed. A report earlier in the week showed that consumer price increases in April were lower than expected. The US Department of Commerce stated that retail sales rose slightly by 0.1% last month, with the March increase revised up to 1.7%, while economists had expected no change. The previously reported retail sales growth for March was 1.5%. The increase in retail sales in March was partly due to the advance purchase of goods such as automobiles ahead of the US tariff hikes.

Recent remarks by Fed officials suggest that the US Fed needs more data to determine the impact of tariff announcements on prices and the economy before adjusting its policies. In his comments on Thursday, Fed Chairman Powell did not focus on monetary policy or the economic outlook, but he stated that, given the inflation experience of the past few years, Fed officials believe they need to reconsider the key factors surrounding employment and inflation in their monetary policy approach.

Fed Governor Barr said that the economy is on a solid footing, with inflation moving toward the 2% target, but trade policy has introduced uncertainty into the outlook. The market expects the US Fed to cut interest rates only by September. (Wenhua Comprehensive)

Other Currencies:

The US dollar fell 0.73% against the Japanese yen to 145.68 yen; the British pound rose 0.23% to $1.329, as the UK economy grew more strongly than expected in early 2025.

Macro:

Today, data to be released include China's annual and monthly electricity consumption for April, the initial monthly rate of US building permits for April, the initial annualized total of US building permits for April, the monthly rate of the US import price index for April, the annual rate of the US import price index for April, the annualized total of US housing starts for April, the initial value of the University of Michigan's consumer sentiment index for the US in May, the eurozone's seasonally adjusted trade balance for March, the initial quarterly rates of Japan's seasonally adjusted real and nominal GDP for Q1, the initial value of Japan's seasonally adjusted annualized quarterly rate of real GDP for Q1, New Zealand's inflation expectations for the next two years in Q2, New Zealand's inflation expectations for the next year in Q2, and more.

Crude Oil:

As of the overnight close, oil prices in both markets fell together, with US crude dropping 2.31% and Brent crude falling 2.22%, both recording two consecutive days of decline. This was due to market expectations that Iran would release more oil into the global market.

SEB analyst Ole Hvalbye said, "Any immediate lifting of sanctions due to a nuclear deal could bring 800,000 barrels per day of Iranian crude oil supply to the global market, which is undoubtedly negative for oil prices." John Kilduff, a partner at Again Capital in New York, said, "We are in a state of flux. Either President Trump will bring Iran to zero or integrate them into the international community. Therefore, the threat to supply is two-way. Either some Iranian oil will continue to flow into the market, or we will reap the full benefits of Iranian oil restrictions. This is what is affecting oil prices."

Meanwhile, the International Energy Agency (IEA) has revised its forecast for oil demand growth in 2025 upwards to 740,000 barrels per day (bpd), 20,000 bpd higher than its previous projection, citing upward revisions to economic growth forecasts and lower oil prices that will support consumption. However, economic headwinds, coupled with record-high EV sales, are expected to reduce global oil demand growth for the remainder of 2025 from nearly 1 million bpd in Q1 to 650,000 bpd. "Signs of a slowdown in global oil demand growth may have already emerged." The agency has revised its forecast for global oil supply growth in 2025 upwards to 1.6 million bpd, an increase of 380,000 bpd from the projection in last month's report, as more optimistic production prospects in Saudi Arabia offset the expected slowdown in US shale oil production amid low oil prices. It has also revised its forecast for global oil supply growth in 2026 upwards from 960,000 bpd to 970,000 bpd. The IEA stated that a significant increase in supply, far exceeding demand growth, will lead to an average increase in oil inventories of 720,000 bpd this year. (Comprehensive report from Wenhua)