Stock markets softened following more robust than-anticipated data in the US and CPI data in Europe, prompting central banks to adopt a less aggressive rate-hiking stance. Services ISM data was 56.5 higher than expectations at 53.5, where business activity rose from 55.7 to 64.7, indicating that the economy is still performing well, and new orders were marginally lower. Employment increased to 51.5 after the stronger-than-expected NFPs on Friday. Rate hikes are still on the cards, but the next increases the risk of pushing the economy into a recession. The dollar index was firmer; however, a Bloomberg survey showed that 57% of respondents thought the greenback would be trading lower in a month; we agree and are shifting towards a sell rallies approach. ECB council members continue to suggest rate hikes of 50bps, and traders expect this in their next meeting. The US 10yr yield has rallied back to 3.5733%.
Metals prices were well-bid overnight following the news from China that they were reducing testing in key regions. The traders are getting excited about the re-opening trade now, pushing futures prices higher, but the physical market is poor. Copper pulled back from the high of $8,555/t and traded at $8,388/t with the cash to 3-month price at -$25.75/t contango. Tin prices have rallied strongly, reaching $24,370/t, up nearly 5%, with the spread still backward at $125 but a lot less than in previous months. Zinc was also higher, trading at $3,164/t and closing at $3,126/t, but it sold off after the close. Aluminium prices weakened today after failing above $2,570/t, which triggered a sell-off to $2,545/t. Lead closed at $2,238.5/t, while nickel failed above $29,000/t and traded back towards $24,600/t with the cash to 3s at -$112/t contango.
Energy prices weakened today, with WTI and Brent at $84.78/bl and $79.09/t. Gold and silver also softened today, trading at $1,772/oz and $22.25/oz, respectively.
All price data is from 05.12.2022 as of 17:30