US stocks edged higher after the big tech earnings helped support the sentiment after the First Republic Bank extended the slide. Markets continue to pay attention to corporate earnings to help drive the outlook ahead of the PCE reading tomorrow, with the Fed still set on the 2.0% target over the longer term. Meanwhile, the former Treasury Secretary Summers stated that taming inflation to that level would likely lead to a meaningful economic downturn. The dollar edged lower, maintaining the 101-102 range seen in the last couple of days, and the 10yr US Treasury yield held firm at 3.40%. Elsewhere, disappointing earnings from Europe drove local stocks lower. EU GDP is expected to have come in slightly stronger than in Q4’22, putting the bloc on a path of avoiding technical recession. The German government has once again raised its economic GDP forecast for 2023, at 0.4%; whilst twice as much as initially expected, still putting the economy on the back foot going into the new year.
Sentiment improved marginally today as metals tested the longer-term support levels and rejected them. Despite high-frequency indicators pointing to a continued marginal recovery of the Chinese economy, the scale of the expansion does not seem enough to drive market sentiment, and we anticipate the focus to shift back to China micro after the central bank meetings in the first week of May. Iron ore futures bounced higher after testing the support level of $100/mt before settling higher at $105.18/mt. Aluminium kept testing the support level of $2,330/t before settling slightly lower at $2,327/t. Copper remained supported above $8,550/t. Lead and zinc closed at $2,105/t and $2,645/t, respectively. With the upcoming Labour Day national holiday, we expect to see some restocking take place from Chinese downstream buyers – a traditional move in anticipation of higher demand following the holiday.
WTI and Brent remained broadly unchanged. Gold and silver held their ground at $1,995/oz and $25.00/oz, respectively.
All price data is from 26.04.2023 as of 17:30