US stocks edged lower as the risk-off sentiment intensified today, but the S&P 500 still managed to close the third straight month with gains – the longest-running streak since the summer of 2021. The 30yr mortgage rates jumped 22bps to 6.91%, further stifling demand for home purchases. Germany, in line with other bloc’s economies, pointed to a slowdown in inflationary pressures, growing by 6.3% on a year-on-year basis. This helps to underscore the ECB’s call for the end of its tightening cycle. Markets are no longer pricing a full 50bps by the ECB, with markets pointing to the peak rate at just below 3.75% by September. The dollar is trading at 104.50, whereas the 10yr US Treasury yield fell to 3.65%.
Base metals were once again under pressure after manufacturing performance out of China disappointed on the downside; the non-manufacturing also came below expectations as reopening optimisms cooled. At the same time, the value of new home sales in the region by the 100 biggest developers grew by 6.7% y/y; this pales in comparison with the 29% figure seen in the previous two months. Sales fell by 14% m/m. This news weighed on metals, especially used in the construction sector, as economic sectors struggle to show signs of recovery that markets originally anticipated. Only aluminium managed to gain some ground today, holding above $2,200/t to close at $22,46/t. Meanwhile, copper fell back below $8,100/t to $8,089/t. Lead and zinc saw the brunt of the decline, with both losing more than $40/t of value on the day to close at $2,012.50/t and $2,248.50/t, respectively.
Oil futures continued to weaken, with muted China data weighing on demand outlook; WTI and Brent are now trading at $68/bl and $72/bl. Gold and silver continue to hold above the support levels at $1,967/oz and $23.03/oz, respectively.
All price data is from 31.05.2023 as of 17:30
