Prices for industrial metals have seen an uptick, propelled by the anticipation of a global manufacturing resurgence. Concurrently, Asian stock markets have experienced slight increases, with investors treading cautiously ahead of forthcoming U.S. inflation figures and a pivotal meeting of the European Central Bank.
The MSCI index tracking Asia-Pacific shares outside Japan recorded a 0.2% rise, while Japan's Nikkei index advanced by 0.6%.
In Shanghai, copper futures climbed 1% to reach a two-year zenith, marking a more than 10% increase over the past month. Similarly, zinc prices achieved a five-month high, and aluminium prices hit a 22-month peak. Despite the impact of China's real estate sector downturn, iron ore prices have stabilized above $100 a tonne in Singapore.
According to Vishnu Varathan, the head of economics at Mizuho Bank in Singapore, the uptrend in metal prices is largely driven by bets on China, coinciding with a global manufacturing recovery that bodes well for China's industrial resurgence.
Recent data indicates a positive trajectory in global manufacturing activities. German industrial production exceeded expectations in February, while U.S. manufacturing showed growth for the first time in eighteen months. Additionally, China's manufacturing sector expanded in March for the first time in six months.
The allure of precious metals continues to grow, with gold prices nearing a record high and silver reaching its highest level since mid-2021. Platinum prices have also seen a significant increase, while Brent crude oil prices remain above $90 a barrel.
Despite the rally in metals, Chinese stocks have lagged, although Hong Kong's Hang Seng index saw a 1.2% increase in early trading. The Australian and New Zealand dollars have strengthened, reflecting optimism in China's economic prospects.
Looking ahead, the global financial market's attention is set on the U.S. inflation data expected on Wednesday and the European Central Bank's meeting on Thursday. With expectations for U.S. rate cuts diminishing, investors are keenly awaiting these events to gauge future market directions.
Investor sentiment has shifted, with less confidence in significant U.S. rate cuts compared to earlier in the year. The anticipated annualized U.S. inflation rate is set to increase, and bond yields are reaching new highs, signaling evolving market expectations.
The dollar's performance has been mixed, with the euro showing strength amid anticipation of the ECB's stance. The yen, on the other hand, remains under pressure due to the widening interest rate differential with other major currencies.
Japanese authorities have indicated their readiness to intervene in currency markets to address the yen's rapid depreciation, highlighting the global complexities of exchange rate movements and monetary policies.
