MI Comment: Aluminium resists contagion

Market talk of 'credit contagion' and 'risk aversion' replaced the usual new-month buzz of fresh fund allocations on Wednesday. Overall markets moved lower as a result with even a rampant oil price failing to enthuse the 'basketeers', or the managers of commodities indices who had been so prevalent in recent times. As we've said before, sentiment is everything and slowing manufacturing PMIs in China and elsewhere didn't help. Aluminium more or less did its own thing, coming off with the others in the first half of the day before recovering in the latter. As we noted upon signing off, consumer buying was strong at lower levels. Technical support had been put at 2710/20 and after slipping from 2749.50 to 2720 prices picked up again, regaining 2745 in the aftermarket. The nearby contango was close to full stretch, forward backwardations were $0.50-$1.00/mth easier throughout and the warrant banding reports were empty. Trading was more patchy on Thursday morning with only 1,000 lots going through Select for the whole premarket. At the start of trading in London prices peaked at 2751 from where they slipped back to 2733, last at 2740. Resistance started at 2780, support at 2720, with a breakout in either direction required to test the outer reaches of the market's broad range.