US stocks continued to gain ground, with S&P 500 seeing the 5th consecutive day of gains as market confidence continued to improve following banking sector woes. At the same time, markets are beginning to price in the end of the Fed’s tightening campaign, and while we see no pivot taking place in the near term, the anticipation of a pause in rates will add to market confidence. Even oil moves have struggled to bring in a tighter monetary policy outlook. The last time OPEC+ hiked by as much as 1m bl/d, it was a pre-emptive move to adjust for a lower demand figure. Given tighter market balance, we could see oil futures average at $75-80/bl, but this should not significantly add to the inflation readings but instead help maintain prices sticky. We believe that the Fed will look through the oil price shock of this scale and stick to its current policy rhetoric. Meanwhile, US vacancies dropped to May 2021 lows of 9.9m in February, highlighting that labour demand might be easing slightly; even if consistent, we do not expect this to translate into higher unemployment in the near term, given the lag effects.
Base metals weakened today, and the latter half of the day saw pronounced declines down to long-term moving average levels. Weaker ISM manufacturing performance from the US weighed on sentiment and, in turn, prices. The decline was less pronounced in energy-intensive metals such as aluminium and zinc, as the recent oil gains provided some support. Aluminium closed at $2,370.50/t; zinc closed marginally lower at $2,397.50/t; cash to 3-month settled lower at -$46.00/t. Losses in copper were more protracted, as the metal fell below the support of $8,900/t to $8,751/t. Lead closed at $2,117/t.
Oil futures cooled slightly today, with WTI and Brent now at $80/bl and $84/bl. Gold and silver jumped higher, now trading at $2,022/oz and $24.88/oz, respectively.
All price data is from 04.04.2023 as of 17:30