Selling pressure across global equity markets persisted today, with all major regions were weaker. The tech sector was particularly soft today as riskier assets have suffered since the central bank meetings this week, and options expiry compounded moves. Equities are expected to fall as economic growth slows, unemployment starts to rise, and the impact of higher rates takes hold. Goldman has indicated that they may cut 4,000 jobs, as US PMIs declined across services, composite, and manufacturing at 44.4,44.6, and 46.2, respectively. European PMIs were also contractionary as CPI increased in November by 10.1% Y/Y, and core CPI was 5% Y/Y. The dollar strengthened against major economies, and the index at 104.72; cable and EURUSD weakened today as the correction continues. Yields increased today, with the US 10yr at 3.49% and the UK at 3.338%. The German yield has rallied this week and stands at 2.144% due to the hawkish ECB and high inflation print today.
Metals were softer today, except for Nickel which was bid and tested resistance at $29,715/t. The market trades at $28,630/t, and cash to 3-month spreads are still at $208/t. Zinc faced strong selling pressure, testing support at $3,000/t, futures closed just off the lows at $3,018/t, and the spread is backwardated at $30.50/t. Copper prices edged lower despite news of copper mines shutting; the dollar and lower economic growth continue to dominate prices. The 3-month contract trades at $8,272/t at the time of writing, with the contango at $32.5/t. Aluminium traded in a narrow range and was unchanged at $2,385.5/t at the time of writing. Tin also struggled for direction and closed at $23,535/t, with the lead at $2,151/t. China announced a new state-owned company would be the world’s largest buyer of iron ore when it consolidated purchases for some of China’s largest steelmakers, according to Bloomberg. Iron ore prices were down at $109/t.
Energy prices declined to test appetite below $79/t, but strong buying at this level has kept prices around $80/bl for Brent, with WTI at $75.98/bl. Gold was bid again today, trading at $1,789.86/oz, and silver at $23.11/oz.
All price data is from 16.12.2022 as of 17:30