US stocks opened higher today, buoyed by the release of S&P PMI data, which indicated a notable uptick in private sector activity in the world's largest economy. The S&P Manufacturing PMI transitioned into expansionary territory, coinciding with an upsurge in service sector performance. This shift elevated the composite reading to 52.3, a rise from December's 51.0. The index reached its highest level since May 2023, reaffirming the resilience of the U.S. economy in the face of high-interest rates. Elsewhere, Eurozone data revealed a slight increase in manufacturing within the common currency area, with the HCOB Eurozone Manufacturing PMI climbing from 44.4 in December to 46.6 in January. However, a weaker-than-expected performance in the services sector resulted in the Composite reading remaining below 48. The U.S. dollar depreciated against other major currencies and stood at 103.08, while the 10-year US Treasury yield saw fluctuations today, trading at 4.14%.
Base metals started off on the front foot, supported by China's decision to cut the RRR and indications of additional support. Recent announcements highlighted policymakers' urgency to support the economy and, in turn, risky assets. While these announcements might offer some short-term incentives for base metals, we maintain the view that with a lack of sustainable improvements across the nation's performance, prices will come back to their averages in due course. The limited impact on prices became more evident in the second half of the day, when preliminary PMIs pointed to stronger economic performance across key nations, weighing on riskier assets. In particular, aluminium reversed today's gains, falling back below $2,250/t before edging lower to $2,225/t. Copper's upside stalled after the metal breached the $8,550/t level, holding above it in the meantime. Lead's upside also stalled, following a 9% rally over the course of the last couple of days; if prices find support at this level, we could see lead gain further footing above $2,200/t.
Better-than-expected US PMI data, confirming the robustness of the world's largest economy, reinforced investors' expectations of higher-for-longer interest rates. This led to a significant drop in gold prices, falling to $2012.43/oz. Meanwhile, silver prices edged higher to $22.67/oz. Oil extended yesterday's gains, with WTI and Brent crude appreciating to $75.66/b and $80.5/bl, respectively.
All price data is from 24.01.2024 as of 17:30
