US stocks edged higher, and we have seen increased optimism in recent days, following the expectation of the end of the tightening cycle. We expect this sentiment to intensify by the end of the year. There are a couple of data points coming from Europe this week, and we are likely to see a contraction in both the UK GBP and Germany’s industrial production, which should weigh on overall European performance. This will further reiterate the case for a central bank pause. The only bank that might cut is the Central Bank of Poland, which has started to do so since September; strong local currency is allowing the bank to do so without significant damage to the economy. Otherwise, it should be a very quiet macro week. The dollar remained low, and the 10-year yield held firm at 4.63%.
Metals strengthened today, breaking out of the recent ranges slightly, following equities, but volatility remains low. Zinc continued to strengthen following the Trafigura announcement of some zinc plant closures in Tennessee; the market digested the news quite well. We think that we are unlikely to see any strong upside moves in the near term. In comparison, last year’s European energy crisis brought zinc close to $3,500/t. In the meantime, base metals are following equities and the dollar, which remained low at 105. Aluminium and copper strengthened $2,287.50/t and $8,238/t, respectively. Lead edged higher for the fourth straight day, closing at $2,180/t.
Oil futures strengthened to $81/bl and $86/bl for WTI and Brent, respectively. Gold and silver continued to edge lower to $1,982/oz and $23.05/oz, respectively.
All price data is from 06.11.2023 as of 17:30