Chinese equity markets were under pressure as regulators widen their investigations into possible rule violations at several major brokerages. The Shanghai composite traded back towards 3400 area (-5.5%) giving up all the gains made during Nov and the Hang Seng fell 2.5%. Belief that the Fed will raise US rates at the next FOMC meeting in Dec bolstered the green back which weighed on industrial commodities.
LME specific, reports were numerous from China concerning producer cutbacks in Ni and the possibility that the SRB may withdraw 1mln mt of aluminium from the market – which in the scheme of things – would be a drop in the ocean and merely delay the inevitable. Ni producers have pledged to cut 15k mt production in Dec with plans for 20% production cuts in 2016. Ni has seen waves of short covering in the last few days lift the market to 9330 yesterday but today saw a pull back across all metals with Ni back to 8700 level. Zinc traded back below 1600 and lead tested support at 1600. Ali benefitted early on from the China rumours which saw it move up to 1530 resistance levels before profit takers put the lid on the rally. On the spreads, short covering of Dec positions in copper saw Dec-3m tighten to 21b. 5pm LME closes were all lower on the day bar tin.
European equities were a little softer following good gains over the past 2 days and the Dow was either side of unchanged as many investors take a long weekend break for Thanksgiving.