US stocks are closed for the Martin L. King's celebrations today, but stock futures slipped slightly. Meanwhile, European stocks continued upward, following the last two weeks' notable performance. This week's key events are the ECB minutes and the CPI reading, with the latter expected to soften to 9.2%. In addition, several Fed officials will also be attending the Davos forum this week, providing clues regarding the next meeting trajectory. Elsewhere, the BOJ opened the door to speculations surrounding the monetary policy moves in the upcoming meeting on Wednesday. While most economists anticipate no change in the policy this week, more have brought their forecast forward for a policy shift, given the surprise band adjustment decision in December.
Sentiment soured across the base metals complex today as the risk-off sentiment took hold. In particular, the iron ore futures tumbled by $5.75/mt after China pledged to tighten the controls on prices given the recent rally; the metal now trades at $118/mt. Copper weakened following seven days of gains but remained supported above $9,100/t to settle at $9,104.50/t. Likewise, lead and zinc saw some marginal declines, falling to a close at $2,251/t and $3,304.50/t, respectively. Aluminium, on the other hand, managed to trend higher, breaking above the resistance of $2,600/t to settle at $2,621/t; the cash to 3-month spread strengthened into -$27.00/t. China's GDP figure is out tomorrow and is forecast to have grown by 1.6% y/y; consumer activity likely declined further in December. Even with the reopening earlier this month, we do not anticipate seeing tangible growth in the real sector for months. Only following the rebound in economic activity following the Lunar New Year celebrations would we expect the government to introduce traditional support measures to stimulate the economy.
European gas prices gained 6.55% during the day, driven by the cold winter snap across the bloc this week. Given historically low temperatures during the end of January and February, energy prices might see some upside in the near term. Still, European LNG inventories remain high, just under 90% of the storage filling level, alleviating supply tightness. Gold and silver weakened slightly to $1,914/oz and $24.23/oz, respectively.
All price data is from 16.01.2023 as of 17:30