US stocks bounced back today as a sense of calm triggered a moderate risk-on sentiment today. The markets seem to have digested the news and assurances from central banks about financial stability but still struggled to bring the sentiment back to levels seen a week ago. Still, investors now anticipate a 20bps increase from the Fed tomorrow, and we believe that 25bps will materialise; however, we pay close attention to Powell’s speech later in the day to help drive the sentiment. The dollar continued to be weaker, while the 10yr US Treasury yield jumped back above 3.50%. Elsewhere, ZEW institute’s investor sentiment dropped to 13.0, the first monthly decline in six months, as banking pressures finally weighed on investor confidence.
The mixed sentiment was seen across the base metals today as market fears settled and investors turned back to the fundamentals to help drive the outlook. We continue to see improvements from domestic downstream consumption, and this has driven social inventory lower so far this week. We expect this trend to accelerate into April, providing support for prices in the near term. Aluminium weakened slightly, slowing edging to test the $2,270/t level before settling at $2,266.50/t; the cash to 3-month spread remained low at -$51.00/t. A strong upside in the latter half of the day helped prop up gains for copper, as the metal closed at $8,757.50/t. Lead and zinc, on the other hand, closed lower at $2,094.50/t and $2,864.50/t, respectively.
Oil futures found some respite, with WTI and Brent gaining ground to $68/bl and $74/bl. Meanwhile, China’s imports of Russian energy skyrocketed to $88bn in the year ending February, replacing other buyers that have chosen to cut ties with the nation. Demand for safe havens waned, and gold and silver weakened for the second-straight day to $1,943/oz and $22.20/oz.
All price data is from 21.03.2023 as of 17:30