Equity markets declined today as sentiment was downbeat due to economic expectations, and key market participants suggesting earnings will be weaker. US stocks declined as a result, with tech leading the way, the Fed policy remains centre stage and while we expect the pace of rate hikes to slow, the terminal rate is anticipated to be higher. The dollar index failed to break above the 200DMA level and it remains resistance, and the 10yr stands at 3.55% marginally lower on the day but holds above the 100 DMA. Sentiment in Europe was similar, and we do not think indices are pricing in central bank policy, and earnings potential, this is exemplified by the FTSE 100 up on the year. We have seen reports that the number respondents to job surveys have been declining suggesting that the job market could be weaker than data suggests, there was also an increase in citizens looking for second jobs as the cost-of-living increases which could skew the data.
Metals prices have rallied today, except for aluminium and lead. Lead prices tested support at $2,200/t and closed off the low at $2,220/t. Nickel and tin continued to be well supported as systems continue to favour the momentum in these assets. Nickel was well bid to test $29,365/t but prices struggled at this level and trade at $29,285/t at the time of writing. Tin closed at $24,814/t. Copper is unchanged today with prices testing support and resistance but struggling for momentum, the economic outlook remains contractionary, and while futures prices have rallied there is a disconnect with physical demand, prices closed at $8,421.50/t with the cash to 3 at -$36.75/t. Iron ore prices continue to trend higher as investor look to gain exposure to the Chinese economy re-opening, too early for higher demand but investors are not trading off that, the SGX 62% fe trades at $108.8/t.
Energy prices declined today as downside momentum continues, brent and WTI trade at $80.02/bl and $74.59/bl at the time of writing. Bearish sentiment has been triggered by the economic slowdown, and the EIA has cut their price forecast for 2023 with output expect to be to 12.34m b/d. Gold edged higher to $1,771/95/oz with silver lagging being, and marginally weaker at $22.17/oz.
All price data is from 06.12.2022 as of 17:30