US stocks opened lower today. The dollar index slightly declined to 105.8, while the 10-year US Treasury yield remained mostly unchanged at 4.43%. In the Eurozone, the headline CPI softened in June as expected, with the reading at 2.5% YoY, unchanged from May. However, core inflation saw a slight increase to 2.9% YoY, up from 2.8% in May, driven by rising services prices. Recent months have seen rapid wage growth and weak productivity indicators in the Eurozone services sector, which could solidify rapid price increases, potentially keeping overall inflation above target for an extended period. The ECB is not expected to implement any more interest rate cuts until October.
The base metals market started the day positively, with copper leading the way in price gains. Copper prices once again tested the $9,700/t level but struggled above it, prompting prices to come back to $9,672.50/t. Aluminium was seen at $2,522.50/t. However, it seems that individual metals' fundamentals are now starting to have a bigger impact on prices, potentially causing a disconnect between copper and the rest of the market. Nickel, in particular, due to its strong correlation to copper in recent months, has seen prices fluctuate outside of its fundamental trading range. However, increased selling pressure weakened prices today, and the key support level was tested at $17,000/t. Among all base metals, nickel has the strongest fundamental narrative to keep prices subdued due to the global oversupply coming from Indonesia. While we expect prices to find support above $18,000/t in the medium term, the dislocation with copper will likely grow soon.
Gold softened slightly, hovering around the $2,330/oz level, while silver appreciated, testing $29.80/oz. Oil continued its climb, with WTI and Brent crude rising to $83.3/bbl and $86.7/bbl, respectively.
All price data is from 02.07.2024 as of 17:30
