Summary
- Markets buckled amid de-risking strategies, driven by investor concerns over impending US reciprocal tariffs.
- Base metals continued to soften, with signs of a potential unwind in the COMEX/LME arb contributing to weakness across the complex.
- Gold extended its rally to fresh record highs, supported by persistent uncertainty.
Macro
US stocks opened sharply lower this week as markets braced for a new wave of reciprocal tariffs set to target multiple economies. On Sunday, President Trump stated that the upcoming tariffs would target all nations, intensifying uncertainty around the scope and scale of affected trade flows. This rising unpredictability, combined with mounting announcement fatigue, continues to stoke concerns about increasing recession risks in the US. As a result, broad-based de-risking swept across risk assets, prompting investors to redirect to gold for risk hedging instead. Despite elevated volatility, market reactions seem more measured in comparison to sharp swings seen earlier in the year.
Another significant event this week is the release of the nonfarm payroll figures, which are anticipated to be slightly lower in March, at around 140,000. Any deviation from this estimate could lead to substantial repricing of the Fed’s monetary policy trajectory. Meanwhile, the markets are currently pricing in 76bps worth of rate cuts for the remainder of the year. The dollar opened on the back foot but struggled below the 104 mark, resulting in modest gains today. The US 10-year Treasury yield remained low at 4.22%. Elsewhere, German inflation slowed more than expected in March, nearing the ECB’s target of 2.0% at 2.3% YoY, putting pressure on the central bank ahead of its next meeting, scheduled for April 17th.
Base Metals
After several weeks of growing tightness in the LME/COMEX arb, markets are starting to show signs of unwinding. Given that the copper tariff window has been shortened, there is now growing uncertainty around delivery timelines, raising the risk that some material may not reach the US in time. As a result, this is adding pressure on copper prices, resulting in a fourth consecutive day of losses, with prices slipping below $9,800/t to $9,710/t.
Meanwhile, aluminium prices continued to fall sharply despite tightening fundamentals in the alumina market. China’s recent commitment to curb the construction of new alumina plants has yet to translate into price support. Aluminium has now dropped below $2,550/t, with the next key technical support levels seen at $2,500/t and $2,485/t. Lead and zinc edged lower, as nickel breached the robust $16,000/t support level back to $15,918/t. Tin was the only exception, rallying back to recent highs of $36,645/t, as one of the largest mined producers, Myanmar, continues to face challenges from a recent earthquake.
Precious Metals and Oil
Oil futures strengthened after President Trump threatened actions against buyers of Russian oil, marking a change of tone for Washington. WTI and Brent trade at $71/bbl and $74/bbl at the time of writing. Precious metals emerged as clear winners of recent weeks, with gold posting new highs on the back of continued uncertainty, prompting it to reach $3,124/oz.
All price data is from 31.03.2025 as of 17:30