US stocks continued to soften today despite a weaker macro picture, as the market focused on inflation data out of Europe. European stocks weakened sharply on the open following the preliminary CPI prints from France and Spain, with both seeing growth accelerate in February, at 6.2% and 6.1% y/y, respectively. The implied rates now see ECB raise rates all the way through February 2024. US consumer confidence dropped lower in February, falling below the market forecasts that estimated a month-on-month improvement, citing uncertainty about jobs and incomes as a key reason behind the decline. The dollar softened from 105, and the 10yr US Treasury yield remained at 3.93%.
We have seen some modest gains across the base metals market today, in large part driven by a softer US dollar. Aluminium wavered around the $2,370/t level; the cash to 3-month spread remained low at -$44.75/t, further exacerbating muted domestic demand. The metal settled at $2,373/t. Copper bounced higher, breaking back above $8,850/t to $8,961/t. Lead and zinc closed flat at $2,104/t and $3,000.50/t, respectively. Iron ore futures continue to remain supported above $120/mt. US home price data pointed to another month of decline in December after yesterday’s print that pending home sales rose by 8.1% y/y in January, causing the market to speculate whether the trend is shifting back to home construction in the region. We believe that more price corrections are to come through, and the recent performance could have been a sign of easing mortgage rates and anticipation of another ramp-up in rates from the Fed in the coming months.
Oil futures jumped higher as sanctions on Russia threaten supply; WTI and Brent are now at $77/bl and $83/bl. Gold and silver jumped higher in the latter part of the day to $1,826/oz and $20.85/oz, respectively.
All price data is from 28.02.2023 as of 17:30