US stocks dipped at the opening today. The final S&P US Manufacturing PMI came in lower at 47.9, reflecting ongoing challenges in the sector. The ISM Manufacturing Index for August was also below expectations at 47.2, compared to the forecast of 47.5. Despite these weaker indicators, recent economic data from the US continue to show underlying strength, even amid a prolonged period of elevated interest rates. This has led investors to increase their expectations of a 50bps interest rate cut in September, with forward swaps currently pricing in nearly a 40% chance of such a move. However, we maintain our expectation that the Fed will proceed with a more measured 25bps cut. This approach would allow the Fed to better assess the economic impact and adjust its strategy as needed, reducing the risk of overreacting to recent data. The dollar hovered around the 101.7 level, while the 10-year US Treasury yield dropped to 3.83%.
Base metals softened today, offsetting the gains that we made in the last couple of weeks. Copper led the decline following the bearish forecasts from analysts that cited a shrinking outlook from Chinese demand. This prompted copper to correct below the robust $9,000/t level to $8,954.50/t. While we do see confidence in Chinese recovery soften, the longer-term outlook remains in the supply/demand deficit, which should help maintain the robust support level at $8,700/t intact. The rest of the complex followed suit. Aluminium is now seen testing the $2,400/t level, while nickel weakened to $16,462/t.
Precious metals declined today, with gold dropping to $2,479/oz and silver decreasing to $27.8/oz. Oil continued its downward trend, with WTI and Brent crude falling to $70.5 and $73.9, respectively.
All price data is from 03.09.2024 as of 17:30
