US stocks opened lower today following labour market data that showed continued resilience in May. Nonfarm payrolls increased significantly more than expected, reaching 272k compared to 167k in April. Forward swaps now indicate that the Federal Reserve is likely to start cutting rates by November, postponing the previously expected September move. Both the dollar index and 10-year US Treasury yield jumped on the release of the data, trading at 104.8 and 4.4%, respectively.
As we close this week's trading sessions, copper continues to play a pivotal role in shaping our expectations for the base metals complex. Metals started the day on a cautious note, with copper edging back below the $10,000/t level and found support at $9,950/t. However, stronger-than-expected US jobs data led to a rally in the dollar, prompting a stronger correction on the downside. The metal closed at $9,763/t. Likewise, aluminium broke below $2,600/t – a robust support level. Lead and zinc faced protracted selling pressures to $2,199.50/t and $2,767/t. Looking ahead, we expect markets to edge marginally lower before finding support. We believe these support levels will be pivotal in driving the future price narrative.
A stronger dollar and rising Treasury yields acted as headwinds for precious metals today. Gold plunged to $2,310/oz, its lowest level since early May, while silver gave back gains from the last two days, standing at $29.5/oz. Oil continued its upward trend, with WTI and Brent crude trading at $76/bbl and $80/bbl, respectively.
All price data is from 07.06.2024 as of 17:30