US stocks experienced a modest drop at the opening today following Federal Reserve Chair Jerome Powell's testimony before the House of Representatives. Powell maintained a cautious tone in his address, emphasising the importance of sufficient data confirming a decline in inflation prior to considering the initiation of monetary easing. Despite the consistency in the message from the most recent Fed meeting, investors interpreted Powell's remarks as an indication that the onset of monetary easing might be nearing. This perception led to a decrease in 10-year US Treasury yields, which fell to 4.11%. The dollar index also saw a decline, dropping to 103.3%. Investors are keenly awaiting the ECB's statement tomorrow to discern any indications of the onset of monetary easing in the Eurozone.
Base metals have experienced a moderate upside following a more dovish market perception from Powell's notes today. The metals space has been disincentivised to macroeconomic data, and today’s appetite has been limited in comparison to other asset classes. Instead, as we have mentioned in previous comments, a technical mean-reversion strategy remains more prominent in guiding the narrative, particularly when prices break out of the current trading ranges. Copper jumped higher, although it struggled above the near-term resistance level of $8,600/t. Aluminium moves were more subdued, keeping firm at $2,235/t. Lead and zinc strengthened to $2,065.50/t and $2,494.50/t, respectively. Nickel edged lower, but the support at $17,500/t was kept intact.
Optimism about the potential onset of monetary easing bolstered the prices of precious metals today. Gold soared to an all-time high, nearing $2,150/oz, and silver climbed to $24.2/oz. In the oil sector, a positive market mood contributed to strong performances, with prices hitting the higher spectrum of their trading range. WTI crude exceeded the $80/bl threshold, while Brent crude approached $84/bl.
All price data is from 06.03.2024 as of 17:30
