US stocks opened lower while Treasuries climbed, a complete reversal in sentiment in comparison to yesterday, as softer macroeconomic data brought forward chances of recession. US initial jobless claims data jumped to the highest level since October 2021; however, continuing claims remained relatively subdued in comparison to previous weeks. PPI prices rose by 0.2% m/m in April; while above the previous month’s decline of 0.5%, still remained soft. The dollar jumped above 102, and the 10yr US Treasury yield weakened to 3.38%. Meanwhile, the BOE increased interest rates by 25bps today and signalled that more may be needed. That pushed the pound lower, back down to 1.2503.
Protracted losses were seen across the base metals complex today, despite a stronger dollar, after technical momentum pushed metals below the key support levels. A softer macroeconomic picture helped push prices slightly lower on the day, but overall, given a lack of fundamental drivers behind price losses, we expect to see some price recovery take place as futures find new support levels. With the cash to 3-month spreads remaining in a marginal contango, this reaffirms our rhetoric of growing market tightness. In particular, copper broke below the $8,500/t level on the open, closing at November lows of $8,163.50/t; the next robust support levels stand at $8,122/t and $8,000/t, respectively. Likewise, aluminium breached the $2,250/t level down to close at $2,211/t. Lead and zinc declined to close at $2,107.50/t and $2,548/t, respectively.
Oil futures declined in the latter half of the day; WTI and Brent are now trading at $71/bl and $75/bl. Gold and silver weakened to $2,016/oz and $24.20/oz, respectively.
All price data is from 11.05.2023 as of 17:30