US stocks opened lower today, in contrast to European markets, which surged following the ECB's announcement of another 25bps interest rate cut. Meanwhile, the US Producer Price Index (PPI), a key indicator of wholesale price trends, softened to 1.7% YoY in August, down from a downwardly revised 2.1% YoY in July. Recent inflation data suggests that inflationary pressures have been largely contained, raising concerns that the Fed may have waited too long to begin monetary easing. Nevertheless, we still anticipate a 25bps rate cut next week, followed by another in December. The dollar index dipped below 101.6, while the 10-year US Treasury yield edged higher to 3.68%.
Base metals benefitted from the risk-off sentiment elsewhere as the dollar softened. Sharp gains after days of softer performance again confirm the following of the mean-reversion strategy across the complex. Aluminium rapidly jumped above the $2,400/t resistance level to $2,415.50/t. Copper also gained but struggled above the $2,300/t level, prompting it to come back to $9,215.50/t. Likewise, persistent fundamental oversupply weighed on nickel gains, as the metal closed at $16,136/t. Lead and zinc rallied.
Precious metals rallied strongly today, with gold hitting record highs, breaking the $2,550/oz mark, and silver surging to $29.6/oz. Oil prices also saw a recovery, with WTI trading at $69.3/bbl and Brent crude at $72.4/bbl, as they clawed back some of their recent losses.
All price data is from 12.09.2024 as of 17:30
