US stocks traded higher today as data releases pointed to a softer macroeconomic environment, easing some of the pressures for the Fed to hike. US PPI came in much lower than expected, at -0.5% m/m and 2.7% y/y, respectively, given the decline in gasoline prices, a similar trend seen in the CPI release yesterday. Meanwhile, US jobless claims rose to 239,000 in the week ending April 8th, with growth in unemployment benefits from California driving most of the incline. While this drove the dollar lower, below 101, the markets have not changed their expectations for the Fed’s path, with 17bps still on the table for May. The dollar weakness helped bring the euro to the highest level in more than a year at 1.1060.
Dollar softness added much-needed momentum to base metals today, with the complex settling higher across the board. Aluminium jumped higher, back above $2,340/t, to test the longer-term moving averages and settle at $,2367/t. Copper strengthened back above $9,000/t to close at $9,058.50/t. Tightness in cash to 3-month spreads that we have seen accelerate in recent weeks thanks to the build-up of Chinese activity intensified today, with only aluminium and nickel now in contango. Lead and zinc settled higher at $2,146.50/t and $2,837/t, respectively. Lead-acid battery producers have entered a traditional off-season in April, and we expect to see fewer purchases take place over the course of the month. At the same time, lower operating rates across the producers should weigh on end-user demand, and we could see domestic lead prices edge lower in the coming weeks as a result.
Oil futures softened following recent days, as WTI and Brent found resistance at $83.50/bl and $87.50/bl, respectively. Precious metals once again benefitted from softer economic data; gold and silver tested new highs of $2,050/oz and $26.00/oz, respectively.
All price data is from 13.04.2023 as of 17:30