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Daily Base Metals Report

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Authors
Daria Efanova

Daria Efanova Head of Research

Contact research Contact Industrial Commodities

US stocks jumped higher today following yesterday’s decision by the Fed to increase interest rates by 25bps. At the same time, the Fed’s Powell stated that the debt ceiling level should be raised of the government, which is to pay all of its obligations when it is due. The markets have also raised their expectation of rate cuts, with forward swaps pricing in a change of -21bps in December meeting, despite policymakers saying they do not think they will cut rates this year. The sentiment was further accelerated as other central banks joined in their rhetoric to fight inflation. Both the ECB and BOE increased their interest rates by 50bps, with the former stating that a similar-sized hike in March is warranted. The US initial jobless claims fell once again, declining to 183,000 in the week ending January 28th. Tomorrow’s job report is expected to have increased by 190,000 in January, in line with January 2021 lows. The dollar regained upside conviction, after rejecting the support at 100.80, and the euro weakened after testing resistance of 1.1; the 10yr US Treasury yield fell to 3.36%.

Metals opened higher following the Fed’s decision to increase rates by 25bps, but these gains struggled to hold in the former part of the day. Latter decisions by the ECB to hike by 50bps have helped drive the prices back up to opening levels. Copper opened at $9,200/t, but weakness prevailed during the day, pushing prices below $9,100/t to $9,052.50/t. Nickel rebounded from the lows of $29,000/t in the latter part of the day to $29,790/t. Aluminium, on the other hand, struggled to break above the resistance of $2,640/t, as the metal settled at $2,617/t. Lead and zinc closed marginally unchanged at $2,133/t and $,3,82.50/t, respectively. SHFE closed on the back foot with insufficient upside momentum. We have seen some downstream players return and make enquiries, but many players are standing on the sidelines waiting for prices to show a clear direction before joining in the trend. Markets will continue to watch out for China’s economic high-frequency indicators to gauge market appetite.

Oil futures slid marginally, with WTI and Brent settling at $76/bl and $82/bl. Gold and silver weakened sharply following a jump in the dollar, settling at $1,916/oz and $23.50/oz, respectively.

All price data is from 02.02.2023 as of 17:30

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