The US stocks fell sharply today following one of the fastest rallies on record as apprehension in the market increased. Last night dovish comments from the Fed and the expectation of low-interest rates in the long run caused the 10-year treasury yields to fall to 0.675, as the dollar surged. The Fed also promised to inject stimulus further until the labour market stabilises. Fears of the second wave emerged in the US, as total cases topped 2m, especially after the Treasury Secretary Mnuchin announced that the US shouldn’t shut down the economy if the second wave materialises. US jobless claims remain high, however, continue to decline gradually, to 1,542k from 1,897k a week ago.
Similarly, the risk-off appetite caused LME metals to give back some of the recent gains. Aluminium prices traded down to $1,600/t, but support at this level triggered a close at $1,601.5/t. Copper fell over 3% to close at $5,764.5/t giving back recent gains, and breaking through key support at $5,800/t, causing the spread to soften further to -$23.00/t. Selling pressure prompted zinc to close at $2,007/t, above support at $2,000/t. Nickel prices also softened today, with prices closing near the day’s low at $12,656/t. Lead remained on the back foot, closing at $1,740.5/t.
Precious metals lost some of their strength today following the biggest gain in more than a month after the Fed statement to keep interest rate lower for longer. At the time of writing, gold and silver trade at $1,736.36/oz and $17.85/oz respectively. Oil plunged as economic uncertainty fed into the market sentiment, bringing WTI and Brent down to $36.40/bl and $38.85/bl respectively.
