US stocks fluctuated on Friday after the latest economic data release drove the market. Nonfarm payrolls increased by 233k in October, above expectations of 200k, suggesting continued strength in the labour market that could warrant further tightening from the Federal Reserve. Unemployment increased slightly to 3.7%, and the average hourly earnings softened to 4.7% y/y from a 5.0% growth in September. In Eurozone, PPI figures came in lower both on a month-on-month and year-on-year basis, suggesting softening price growth felt by the producers. However, China’s news overrode the sentiment, driving the dollar lower to 111 as the government officials plan to end covid flight suspensions. Whilst the relaxation is marginal on a relative basis, assets sensitive to China’s consumption story performed well.
As a result, we saw a strong rally across the base metals complex today. Copper rallied by more than 6.0%, breaching highs of $8,000/t, the level not seen since mid-September; the metal settled at $8,099/t. The dollar weakness also provided support for overall metal performance. We expect any news surrounding China’s lockdown conditions to drive the appetite for metals that day, and the announcement of a potential reopening could cause a strong knee-jerk reaction. Zinc was next in line, jumping by more than $170/t to close at $2,874/t. Nickel jumped to test $24,200/t before settling at $23,811/t. Aluminium broke above $2,340/t to close at $2,355.50/t. Lead, however, struggled to maintain the momentum after resistance at $2,040/t sent the metal back down to $1,996.50/t.
Oil futures rallied with other commodities, with WTI and Brent strengthening to $91/bl and $97/bl. Gold and silver benefitted from a softer dollar; silver rallied to $20.75/oz, and gold traded at $1,672/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 04.11.2022 as of 17:30