US stocks weakened, given the heightened risk-off sentiment today. Bonds jumped higher, and the dollar benefitted as a result. The weaker European macroeconomic picture heightened the anxiety about the potential prospects of a continuing tightening cycle from major central banks, bringing into question the possibility of a soft landing. Germany’s PMI pointed to a larger-than-expected contraction in June, with sustained manufacturing weakness and a slowdown in services driving the narrative; a similar story is seen from French figures. This prompted the euro to decline to 1.089. Elsewhere, UK retail sales posted an expansion month-on-month in June, causing the markets to fully price in a terminal policy rate of 6.25% in February.
A bound of volatility took over the metals’ prices today, causing some robust support levels to be taken out. In particular, aluminium breached the longer-term support level of $2,200/t, testing the October 2022 lows of $2,163.50/t. Likewise, copper weakened sharply below $8,500/t to close at $8,290.50/t at the time of writing. This is despite the recent announcement that Codelco has halted some copper mining operations in Chile due to heavy rains in the region. Zinc saw protracted losses, closing lower at $2,364.50/t, while nickel remained broadly unchanged at $21,311/t. Lead settled at $2,123/t. The losses, however, failed to prevent further tightening in the spreads, with aluminium and copper cash to 3-month increasing further into -$37.50/t and $18.00/t, respectively.
Oil futures opened lower on the day, and WTI and Brent remained low at $68/bl and $73/bl. Gold and silver benefitted from the surge to safe havens, however, still struggled to offset earlier losses, trading pretty much unchanged on the day at $1,922/oz and $22.38/oz, respectively.
All price data is from 23.06.2023 as of 17:30