US stocks opened lower today, influenced by the release of the Producer Price Index (PPI), which exceeded expectations, propelling the dollar to approach the 104.6 mark. The PPI eased to 0.9% YoY in January, down from 1.0% YoY in the previous month, against the anticipated 0.6% YoY figure. This unexpected rise in the prices that domestic producers receive for their goods indicates potential persistence in inflationary pressures. Consequently, investors have adjusted their forecasts for the initiation of monetary policy easing, now estimating a 61.5% likelihood of a rate reduction in June. This recalibration led to a rise in the 10-year US Treasury yield, which neared 4.32%. In the UK, retail sales data revealed the fastest growth since April 2021 in January, with a 3.4% MoM increase as consumers flocked back to stores following a dip before Christmas. All sectors, except for clothing stores, saw a rise in sales volumes.
A combination of strong production inflation readings and hopes of economic recovery from China prompted base metals to be higher today. In particular, copper rallied above $8,400/t, influenced by these factors, and thin liquidity in the absence of Chinese markets caused the metal to trade at $8,488/t. These gains do not look sustainable, but we expect prices to be supported above $8,400/t in the near term. Lead and zinc also responded positively as prices edged back to their averages. Aluminium was barely unchanged once again.
Precious metals continued to build on the previous day's momentum, with gold and silver climbing to $2006.1/oz and $23.12/oz, respectively. Meanwhile, oil prices experienced fluctuations before stabilizing; WTI stood at $78.1/bl, and Brent Crude traded at $82.7/bl.
All price data is from 16.02.2024 as of 17:30
