US stocks jumped higher amid jobs data relief that supports the Fed’s move to slow down the pace of hikes this year. US nonfarm payrolls increased by 223,000 in December, less than anticipated, and wage gains cooled. At the time of writing, the markets are leaning towards a 25bps hike at the end of this month, down from the 50bps announced during the latest meeting. Moreover, the US service gauge fell sharply into the contractionary territory at 49.6 in December, with softening demand driving the decline. As a result, the 10yr US Treasury yield sold off while the 2yr yield lost as much as 30bps. The dollar weakened into 104. Elsewhere, European inflation returned to single-digit growth of 9.2% in December; however, the cooling energy pressures were the only reason for the decline, whilst the core components of inflation remained upwardly sticky.
Metals climbed higher on the open today on the back of the news that China might ease the “Three Red Lines” policy that helped accelerate the housing market collapse. Still, this failed to support the sentiment among the base metals group, only with softer job gains in the US adding to the gains later on in the day. Aluminium jumped higher from the support level of $2,260/t to settle at $2,295.50/t; the cash to 3-month spread tightened into -$32.50/t. Copper was also seen edging higher, breaking above the resistance of $8,550/t to $8,589.50/t. Nickel remained broadly unchanged following the two-day sell-off as it settled below $28,000/t at $28,089/t. Only lead closed lower at $2,200.50/t.
Oil futures were also seen jumping higher following the jobs report, with WTI and Brent edging to $74/bl and $79/bl. Precious metals rallied as a result; gold and silver now traded at $1,860/oz and $23.80/oz, respectively. The former retested recent highs.
All price data is from 06.01.2023 as of 17:30