US stocks edged lower, with the tech sector leading the decline. Investors are waiting for the Fed announcement and will be paying attention to Powell's comments to gauge the timing and scale of any upcoming cuts this year. In addition, the markets are digesting the news of lower-than-expected labour costs, which only increased by 0.9% in Q4 2023, the smallest increase since 2021. This caused the 10-year US yields to fall below the 4.0% mark, and the dollar fell to 103.15. Another report shows that companies added only 107,000 jobs in January, which was less than expected, further highlighting the recent softening of the labour market. However, the employment figures remain strong historically, which supported the dollar above the 103 level.
As a result of the softening labour costs, macro-sensitive metals like aluminium and copper increased in value and closed at $2,280/t and $8,608.50/t, respectively. Conversely, lead and zinc softened as there was little impact from macro noise. This was largely supported by the marginal addition to LME stocks, prompting cash to 3-month spreads to widen. In the short term, stocks and positioning will continue to play a crucial role in shaping the lead and zinc price narrative.
Oil futures weakened, with WTI and Brent now trading at $76/bl and $81/bl. Precious metals initially increased in value due to positive macro news but gave up most of their gains as markets approached the news with caution.
All price data is from 31.01.2024 as of 17:30