US stocks fluctuated but continued to edge lower on Monday ahead of this week’s big central bank decisions, with 3 key meetings taking place on Wednesday and Thursday. The Fed’s 25bps hike is already priced in, and the market will pay close attention to Powell’s speech to help address the path for future monetary policy tightening. We suspect that policymakers will reaffirm another 25bps for March and the need to keep higher rates for longer. The dollar and the 10yr US Treasury yield both remained unchanged. Flash CPI releases are out for many European economies. Inflation is already proving to be upwardly sticky, with Spanish figures at 5.8% instead of the expected 5.0%. ECB is priced in to hike by 50bps, followed by another 50bps during the next meeting. In the meantime, Germany and Sweden both contracted in the last quarter of the year, below market expectations, despite continued growth in confidence indicators, with January figure at -20.9, March 2022 highs.
China is back from holidays this week, but the overall sentiment is lacklustre. Copper traders were stopped out before the Lunar New Year, driving the prices higher, however, we did not see a traditional follow-up action during the holiday period. Market participants are nervous, and most of the attention will be directed to key central bank meetings. Still, liquidity improved slightly, and we saw wider moves take place. Aluminium dropped sharply below the $2,600/t level in the latter half of the day, as markets failed to hold up above this level, settling at $2,589.50/t; cash to 3-month remained wide at -$36.00/t. Copper dipped back below $9,300/t to settle at $9,210/t. SHFE copper saw moderate declines, before rebounding slightly in tomorrow’s trading to CNY69,620/mt. Nickel, on the other hand, jumped above $29,600/t to close at $29,219/t. Lead and zinc closed broadly unchanged at $2,159.50/t and $3,446/t, respectively.
Oil futures weakened slightly, with WTI and Brent falling below $80/bl and $86/bl, respectively. Gold and silver price performance diverged, trading at $1,923/oz and $23.66/oz at the time of writing.
All price data is from 30.01.2023 as of 17:30