US stocks strengthened later in the day after US economic growth data pointed to continued resilience in the face of further tightening from the Fed. Despite the calls from policymakers yesterday to keep options open for another hike later this year, the market began to price in the pivot from the central bank as soon as March next year. US GDP came in higher than expected in Q2, growing by a 2.4% annualised rate on the back of consumer resilience, the biggest component of the economy. This has once again reaffirmed the possibility of a “soft landing” this year. Meanwhile, US pending home sales rose unexpectedly in June, given the ongoing supply challenges. The dollar jumped to test the 102 level, and the 10yr US Treasury yield edged higher. Meanwhile, the ECB also increased its interest rate by 25bps, bringing the deposit rate to 3.75%; the lack of clarity regarding the September meeting meant that forward swaps are still pricing in 17bps worth of a hike.
Base metals’ gains were reversed later on in the day on the back economic data releases; day-on-day, the softness was marginal. Aluminium fell to test the support of $2,205/t before closing slightly above it at $2,205/t. Likewise, copper broke below the $8,600/t level to $8,569/t. Meanwhile, lead struggled to break below $2,150/t, closing at $2,158/t. Zinc closed at $2,454/t. Longer-term support levels continue to hold firm, and we expect to see continued drift across the base metals space in the near term. Still, with most central bank decisions now out of the way under late September, this should give the market some breathing room to assess the impact of the latest hikes, and we expect the focus to shift back to China’s stimulus story.
Oil futures jumped higher, whereas precious metals erased gains made earlier this week, with gold and silver now trading at $1,946/oz and $24.21/oz, respectively.
All price data is from 30.07.2023 as of 17:30
