US stocks extended yesterday’s losses. US GDP data released today pointed to a higher-than-expected growth in the third quarter of 2023 at 4.9%. As the US resilience had already been priced in by the markets, the positive data did not change investors’ sentiment much. The higher-for-longer interest rates narrative persists in the markets, and no more hikes are expected this year. The dollar stayed mostly flat and stood at 106.72 while the 10-year US Treasury yield edged lower but remained elevated at 4.89%. Elsewhere, softening inflation in the Eurozone combined with weakening economic performance led the ECB to pause its tightening cycle, leaving the main rate at 4.0%. Still, the policymakers emphasised that the rates would remain higher for longer, dashing hopes of interest rate cuts in the near term. The euro edged higher, with the USDEUR pair at 0.95.
Another day of lacklustre activity across the LME, with markets erasing any gains made yesterday as the complex continues to follow a mean-reverting strategy. Meanwhile, the fundamentals remain quite robust: domestic production has increased in line with the construction season in China, and smelter demand remains healthy. However, sentiment continues to drive the narrative for base metals prices, and we expect liquidity to diminish in Q4 2023 as momentum loses steam. Aluminium came back to test the $2,200/t support level, and copper is now back below the $8,000/t level. Nickel continued to edge lower, testing the support of $18,000/t before edging back to $18,079/t. Lead and zinc closed at $2,094/t and $2,435/t, respectively.
Oil futures continued to weaken, with WTI and Brent falling below $84/bl and $89/bl. Gold and silver jumped higher on the open; however, they struggled to break significantly higher, resulting in flat day-on-day performance at $1,977/oz and $22.65/oz, respectively.
All price data is from 26.10.2023 as of 17:30