US stocks gained ground despite weaker macroeconomic data releases today, with tech shares driving the incline. US initial jobless claims jumped to 261,000 in the week ending June 3rd, the highest level since October 2021, highlighting that some softness is starting to show despite the historically-resilient job market. This has eased some expectations for a Fed hike in July, bringing it back to 18bps, in line with the level that we saw ahead of the positive non-farm payrolls and ADP data. This suggests that markets continue to hedge their bets for further tightening from the perspective of labour market data; we expect that next week’s inflation data and upcoming minutes should be a better indication of the July meeting’s outcome. The dollar continued to fall, whereas the 10yr US Treasury yield held above 3.70%.
Softer Fed hiking expectations brought on some risk-on sentiment in the latter half of the day, urging base metals to settle higher. Copper remained above $8,300/t, but resistance at the moving averages is capping an upside breakout. Likewise, aluminium strengthened above $2,250/t and is currently holding above this level, closing at $2,254.50/t. Zinc posted the third consecutive day of gains, closing at $2,408.50/t. Lead closed at $2,037.50/t. In May, Chinese production and smelter capacity increased further on a year-on-year basis; however, from the demand side, downstream sectors continued to show mixed performance, with operating rates lower than in the same period last year. This, once again, highlights the dislocated demand/supply picture and should continue to weigh on prices in the meantime.
WTI and Brent maintained above $72/bl and $76/bl levels. Gold and, in particular, silver rallied to $1,965/oz and $24.20/oz, respectively, on softening the monetary policy stance.
All price data is from 08.06.2023 as of 17:30