US stocks started the day steady, showing little change in overall performance. Investors are recalibrating their expectations regarding the start of monetary easing, with forward swaps now indicating just a 40% probability of an interest rate cut in March. The dollar jumped to 103.69, while the 10-year US Treasury yield rebounded from yesterday's losses, climbing to 4.14%. Elsewhere, in line with expectations, the Bank of Japan maintained its benchmark rate at -0.1%. The central bank hinted that it was getting ready to reduce its large stimulus program, suggesting that negative interest rates might soon come to an end. Investors repriced their expectations, increasingly anticipating the possibility of an end to negative rates in March or April.
Base metals jumped higher today following the news that the Chinese government is working on a package to stabilise funds. Policymakers have launched a series of stimulus measures to revive the economy in recent months. However, consumer confidence remains low, which could undermine the effectiveness of the policies. If today's sentiment fails to hold in the coming days, it could once again jeopardise the policies' effectiveness and send base metals lower on weakened sentiment. Copper bounced back above $8,400/t to $8,414/t, while nickel held firm above $16,000/t. Aluminium saw the biggest increase today, with additional gains supported by the news that the EU might ban Russian aluminium, according to Politico. This caused the metal to jump to $2,235/t. This could potentially prompt further restocking on exchanges. Lead and zinc jumped higher to close at $2,167.5/t and $2,519.5/t respectively.
We continue to see gold trading rangebound as any upside momentum is capped by elevated Treasury yields. The yellow metal fluctuated today and stood at $2026/oz., while silver edged slightly higher to $22.37/oz. Oil maintained its upward trajectory, with WTI and Brent rising to $75.22/bl and $80.35/bl, respectively.
All price data is from 23.01.2024 as of 17:30