US stocks wavered today as investors struggled to push the recent rally further. Poor sentiment from Asian markets weighed on overall performance after industrial profits slowed, reinforcing the belief that the Chinese economy might be in a deflationary environment. US new house sales fell by 5.6% in October after a downward revision to the prior month; despite softening recently, historically elevated mortgage rates continue to weigh on prospective buyers, dampening housing demand. The dollar struggled to break the 103.20 support once again, and the 10-year US Treasury yield remained below 4.50%. Meanwhile, Euro area inflation figures are likely to see a broad base deceleration in November, further reaffirming the pause in the December meeting. December data is likely to edge slightly higher given the low base of growth last year from German energy subsidies.
Weakness out of China weighed on base metals’ performance today, although the losses were marginal. The biggest downside was seen in tin, which lost as much as $1,000/t today, following the increased volatility in the cash to 3-month spread that has been flipping between contango and backwardation since last week. The metal closed at March lows at $22,979/t. Meanwhile, lead and zinc continued to erase previous gains, with the former retracing 100% of gains made since mid-November; both metals closed at $2,162/t and $2,539/t, respectively. Nickel continued to break lower, closing at $19,079/t; there are some dip buyers emerging; however, until there is a strong market move out of the current trend, we expect prices to continue their decline.
Oil futures fluctuated as Saudi Arabia’s request to cut oil supply was met with some resistance from other OPEC+ members. Gold jumped above the May high of $2,000/oz today on the back of a continued shift where markets are pricing at the end of the tightening cycle. We expect further upside from gold in the near term.
All price data is from 27.11.2023 as of 17:30
