US stocks opened lower on Friday and remained near the lows throughout the day, with banks once again driving the decline. Stoxx Europe 600 fell for the second straight day following Deutsche Bank’s turmoil. The dollar jumped above 103, but the 10yr US Treasury yield weakened again to 3.36%; 2yr yield lost as much as 29bps during the day, settling at 3.74%. The markets have almost priced out a 25bps hike in May from the Fed, with forward swaps now at 2bps. The BOE is still set to increase rates by 15bps during its next meeting in May after the central bank’s Governor said that further tightening might be necessary if prices go up again; this was further backed by a robust retail sales performance of 1.2% m/m in February. On the economic front, eurozone growth gauges picked up in March, driven exclusively by the service sector, which expanded to 55.6. While manufacturing was a drag on the overall performance, the composite index managed to reach the highest level in 10 months.
The sentiment has been mixed across the base metals group today, following two days of positive gains. Still, the longer-term ranges remain intact. We remain hopeful about the slight rebound in activity in April, a trend that we have begun to see in recent weeks. Downstream consumption should improve then, and processing fees alongside TCs should rise as a result. Policies introduced by the government have not yet filtered through the real economy, and we will continue to pay attention to consumer trends to help gauge the economic outlook. Aluminium fluctuated around $2,330/t, settling slightly higher at $2,337/t. Upside momentum struggled to keep up in copper, as it fell after testing the highs around the $9,100/t level; the metal closed at $8,921.50/t. Lead and zinc closed marginally lower at $2,125.50/t and $2,891.50/t, respectively.
Oil futures weakened, with WTI and Brent falling o $68/bl and $74/bl. Both gold and silver edged higher but hit robust resistance levels at $2,000/oz and $23.50/oz, respectively, before giving up some of the gains.
All price data is from 24.03.2023 as of 17:30