European stocks opened higher today, bolstered by signs of Chinese stimulus measures; however, risk-off sentiment prevailed during the day, and prices continued to drift lower. US stocks are closed today for the Labour Day holiday. Among G10, the case for the end of the tightening cycle is solidifying, and we expect cuts to be in short supply next year as central banks prefer to do too much rather than not enough. As a result, longer-term yields should remain stable, whereas we see softness trickling through to the near end of the curve. The only exception is the UK: while inflation is cooling at a good pace, the labour market remains tight, adding to hiking expectations. We see that Europe and China are no alternatives to the US stock market, and expect that most of the cash that is not sitting on the sidelines will remain there.
Base metals weakened today, giving up some of Friday’s gains. Volatility continues to diminish, leading to continued moderate fluctuations in prices. In the meantime, China has proposed tougher-than-expected rules on commodity trading as the government is tackling hidden risks in markets. Aluminium rejected price gains above $2,242/t, softening back into $2,201.50/t. Copper fluctuated around the $8,500/t level. Lead and zinc softened slightly following Friday’s rally, closing at $2,223/t and $2,479.50/t, respectively. Tin broke back above $26,000/t to close at $26,372/t.
Oil futures softened slightly today; both WTI and Brent continue to hold above $80/bl, weighing on inflationary decline in major economies. Indeed, Spain's price increases in recent months were supported by consistent energy gains, and further strength in oil futures could once again threaten the path of smooth inflation cooling. Gold and silver remained broadly unchanged at $1,938/oz and $24.00/oz, respectively.
All price data is from 04.09.2023 as of 17:30