Equity markets struggled for direction today as traders look at the economic downturn as a headwind to stocks. End-user demand has been falling sharply in most significant regions. While employment data has been resilient up until now, there is an expectation that this will be the next data point to show weakness. Reports suggest that the number of participants looking for a second job has increased. U.S. treasuries were bid for the same reason, with the 30yr U.S. yield falling below 3.50%, and this caused the dollar to soften in the European afternoon session. The dollar index holds below the 200 DMA, and we are not seeing the USD bid in uncertain trading sessions. In previous months, the dollar traded as a haven, but we are starting to see more preference for precious metals as we enter the final stages of the rate hiking cycle. European GDP for Q3 was above expectations at 2.3% Y/Y and 0.3% Q/Q, which is expected to decline in Q4.
Metals prices were mixed today and lacked direction. There was a modest correction from tin, which failed above $24,705/t, and closed at $24,306/t, and the cash to 3-month spread was marginally weaker at $81/t. Nickel prices pushed higher and broke above $30,000/t into the close and have continued higher. The news that Vale will break out of the metals business in conjunction with reports that Indonesia is considering resuming nickel ore exports but with a tax has prompted uncertainty in the market, which already has concerns over future supply. Copper prices oscillated around $8,430/t, despite the dollar weakening. Aluminium was weaker today after recording a high of $2,512/t, and futures broke back to $2,486/t. Zinc cash to 3-month prices remain backwardated at $24/t, and the 3-month contract closed at $3,183/t while lead closed at $2,212/t.
Energy prices continue to suffer despite the draw in inventories of 5.186kbl for crude. Expectations for higher production have caused WTI to weaken to $72.61/bl and brent at $77.98/bl; it seems to sell pressure is set to continue. Precious metals caught a bid, with silver gaining nearly 2% to $22.63/oz and gold at $1,781/oz.
All price data is from 07.12.2022 as of 17:30