US stocks braced for the Fed’s rate hike decision, with today’s softness suggesting that markets might be anticipating further tightening into the year-end. Meanwhile, the Fed raised the interest rates by 25bps, in line with market expectations, leaving the door open for further hikes down the year. Still, that should give markets some breathing room until Q4 2023 to assess the true impact of rate increases that took place earlier this year. Data from recent weeks pointed out that the economy is in a good place to take further pressure from the central bank: unemployment remains historically low, corporate results are outperforming market expectations, and consumers are not yet showing signs of a complete slowdown in spending. Meanwhile, US new homes sales data fell in June for the first time in four months, suggesting the construction market remains more sensitive to rate decisions. The dollar edged lower but remained above 101, and the 10yr US Treasury yield held firm.
Moderate softness was seen across the base metals market today after traders erased most of yesterday’s gains. In line with our comment from yesterday, positive news out of China is likely to prop up prices on the day, but until substantial changes are implemented into the economy, and until data points to continued strength, metals are likely to drift lower. Aluminium came back down to the support level of $2,210/t to close slightly above it at $2,213/t. Copper softness was more moderate, struggling to break the $8,600/t level and closing above it at $8,617.50/t. Lead and nickel saw the biggest declines across the day, given the protracted buying pressure taking place yesterday; both metals closed at $2,152/t and $21,590/t, respectively.
Oil futures remained broadly unchanged, while gold and silver edged higher to $1,973/oz and $24.92/oz, respectively.
All price data is from 26.07.2023 as of 17:30