US stocks drifted lower on Monday as corporate earnings results once again drove market appetite. PCE this week should point to prices softening in March, but until the central bank meeting takes place in May, we see a macro news vacuum. As a result, the markets are poised to trade sideways, given we see no strong headline. The dollar continued to edge lower but struggled to break the 101.50 level; the 10yr US Treasury yield found support at 3.50%, and forward swaps stood firm on a 23bps hike from the Fed before some easing in the latter half of the year. Elsewhere, we expect Eurozone growth to have come in slightly positive in Q1’23, reducing the risks of a technical recession given the Q4’22 flat performance. BOJ is set to meet this week, with all eyes on the new Governor Ueda, who may start the policy review. Last week’s core reading of 3.8% y/y has put some pressure on the policymakers to reassess the current monetary policy approach.
Sentiment across Chinese markets soured today, with stocks experiencing the biggest two-day slide this year, and base metals felt the lingering effects of this risk-off momentum. Iron ore futures, a traditional gauge ofChinese physical demand, continued to weaken over the weekend, falling below the support level of $100/mt to settle at $103.91/mt, the December lows. Zinc and nickel, the two metals that are also used in stainless steel manufacturing, also felt the brunt of the decline, falling to close at $2,676/t and $24,605/t, respectively. Other metals saw more moderate declines, with aluminium falling to test the support at $2,380/t and closing at $2,382.50/t. Copper also struggled to break below the robust support of $8,740/t.
Oil futures jumped higher after finding support at $77/bl and $80.50/t for WTI and Brent, respectively. Gold and silver remained unchanged.
All price data is from 24.04.2023 as of 17:30
