US stocks fluctuated, with some dip-buying taking place following a robust labour market data report. US jobs increased by 517,000 in January, and unemployment level fell to 3.4%, the lows not seen since 1969. This bolsters the concerns that the economy is not cooling at a fast enough pace to weaken prices. Demand for workers continues to outpace the supply, threatening further rises in wages. The 10yr US Treasury yield jumped above 3.50%; the 2yr yield gained as much as 20bps. The dollar rallied. With a majority of central banks approaching the end of ultra-tight monetary policy moves, markets will pay key attention to data to help drive the sentiment for the upcoming meetings. The data will also be crucial in addressing the potential change of rhetoric from policymakers.
Base metals weakened sharply in the latter part of the day following the jobs data out of the US, underscoring the resilience of economic performance in the face of a tighter monetary policy environment. Appetite from China remains lacklustre. We saw continued accumulation of social inventory in China, and most downstream players are said to not resume production until after the Lantern Festival. Aluminium weakened below the support level of $2,600/t to settle at $2,569.50/t. Copper also broke below $9,000/t for the first time since early January, settling below at $8,980.50/t. Lead and zinc closed lower at $2,099.50/t and $3,241.50/t, respectively. Iron ore sentiment improved during the day, as prices struggled below $122/mt, settling at $124.86/mt.
Oil futures’ upside on the back US economic data did not last, and the WTI and Brent contracts closed the second consecutive week lower at $74/bl and $81/bl. Precious metals sold off, with gold and silver falling down to $1,867/oz and $22.30/oz, respectively.
All price data is from 03.02.2023 as of 17:30