US stocks fell marginally today as the threat of lockdown restrictions outweighed the omicron's limited impact on hospitalisations. US initial jobless claims continued to decline in the week ending December 4th, breaching 1969 lows, however, many are cautious of this figure since, given an unadjusted basis, the level rose during the week. The dollar rallied, highlighting appetite for currency during times of uncertainty, and the 10yr US Treasury yield softened. Yuan climbed to the highest level since May 2018, causing China to raise the FX reserve ratio to help combat appreciating currency. The news caused the yuan to fall, and while it is unlikely this alone will suppress the gains in the longer term, it sends a clear signal of government willingness to get involved if the issue persists. At the same time, Evergrande officially defaulted on its dollar debt, putting significant strain on the construction demand in the long term.
Metals on the LME market were mostly softer today on the back of the above-mentioned factors coming from China. Nickel was the strongest mover after the statement from one of China’s biggest producers that the company commenced production of nickel matte in Indonesia. The metal fell below the support of $20,000/t to close at $19,875/t. Likewise, copper prices struggled above $9,650/t during the day and we saw the metal close at $9,534/t. Aluminium was mostly range-bound and managed to close higher at $2,626.50/t. Zinc’s strength prevailed and the metal closed at $3,310/t.
Oil futures declined in line with the broader markets on the back of the reassessment of the omicron spread. WTI and Brent traded at $71.78/bl and $75.23/bl. Precious metals were also down on the day, with gold and silver edging down to $1,776.40/oz and $22.03/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 09.12.2021 as of 17:30