US stocks closed the week higher on Monday after a solid jobs report alleviated some of the recession fears; regional bank shares rebounded from a solid rout in prices but still struggling to offset this week’s losses. Nonfarm payrolls increased to 253,000 in April, up from 165,000; the unemployment rate fell back to a multi-decade low of 3.4%. Labour market data this week suggests that cracks are starting to show in the economy; however, historically, the market remains tight, and this should prop up further wage gains in the coming months. This could also support positive retail sales growth on a year-on-year basis. Fed-linked forward swaps nudged higher, with instruments for June suggesting that a pause in rate hikes is the most likely outcome. The dollar gains were not sustained, remaining broadly unchanged on the day, and the 10yr US Treasury yield was seen strengthening back to 3.50%.
Base metals opened on the back foot, but positive jobs data brought the risk-on sentiment, urging the metals to settle higher. This move also coincided with the complex testing robust support levels, keeping them intact. Aluminium futures jumped higher, rebounding from the robust support of $2,280/t to close at $2,318.50/t. We saw Chinese smelter prioritise aluminium billets rather than ingots, and if the end demand remains lower than expected in the near term, billet inventory may swell further. Ingot inventory should remain lower, propping up domestic aluminium prices. Likewise, copper gained momentum back above $8,550/t to close at $8,581.50/t. Lead and zinc closed higher at $2,117.50/t and $2,686.50/t, respectively. Chinese economic data pointed to softer growth in the consumer sector in April but still remained expansionary at 56.4.
Oil futures rebounded, with WTI and Brent trading back above $71/bl and $75/bl. Gold and silver weakened to $2,011/oz and $25.50/oz, respectively.
All price data is from 05.05.2023 as of 17:30