US stocks opened lower today, carrying over from Friday’s momentum. The jobs data surprised on the upside, underscoring the health of the labour market. Still, we do not expect the Federal Reserve to change its rhetoric given one economic data release, and we’ll pay attention to the CPI figure next week to help gauge the economic outlook in the country. Markets are uncertain about the outlook of inflation and outlier indicators, such as seen last Friday, are creating strong shocks to the markets. Still, investors are not anticipating a recession in the US in the coming months, and with that, confidence is set to improve from the lows of Q4 when investors anticipated a recession. At the same time, we saw US-China tensions build over the weekend. As a result, the Blinken's trip to China has been postponed and will be subject to what the US finds in the balloon debris. The dollar continued to climb higher, strengthening to 103.60. The 10yr US Treasury yield was at 3.62%.
The sentiment also continued to sour in the base metals group, with most metals settling lower on the day. Copper continued to weaken, breaking below the robust support of $9,000/t completely and settling at $8,871.50/t, cash to 3-month spread also weakened to $35.5/t contango. Nickel lost as much as $1,510/t, falling to close at $27,258/t. US is said to prepare to impose a 200% tariff on Russian aluminium as soon as this week. This caused a jump in aluminium prices to test $2,580/t. But the gain was not sustainable, and the metal settled lower on the day at $2,533.50/t, as the impact on the prices would be limited given its implementation. Zinc weakened to close at $3,133.50/t. With Chinese appetite still on the back foot, macro factors are driving the sentiment across the markets. We expect Chinese sentiment to improve in the coming weeks, but the recovery will be patchy.
Oil jumped higher following Turkey’s earthquake, but also the seaborne ban on Russian oil that took place on Sunday. Demand for diesel in China is improving, but the news is not yet filtering through to move the prices. WTI and Brent remained unchanged at $73/bl and $80/bl. Gold and silver traded at $1,867/oz and $22.32/oz, respectively.
All price data is from 06.02.2023 as of 17:30