Stocks rebounded today as a response to the Fed’s statement that policymakers expect three rate hikes next year vs previously-projected two, instilling confidence in economic rebound going into next year. US initial jobless claims rose marginally in the week ending December 11 but remained at pandemic lows. The dollar weakened but remained supported above 96.00, and the 10yr US Treasury yield was marginally unchanged. European equities were on the front foot after the ECB temporarily boosted the bond-buying to help ease the exit from the stimulus programme next year. The Bank of England, in the meantime, unexpectedly increased interest rates, the first hike in three years.
Likewise, metals on the LME strengthened, driven, in large, by the hawkish monetary policy outlook. Copper, in particular, has been further boosted after one of Peru’s biggest mines began to cut down on production on the back of community protests. The metal jumped back up to $9,500/t, causing the spread to flip back into backwardation; the metal closed higher at $9,507.50/t. Zinc rallied, rallying more than 5%, jumping up the levels not seen since October; the metal closed at $3,422/t. Aluminium found resistance at $2,690/t and closed marginally lower at $2,667/t. Likewise, nickel jumped higher, offsetting the previous day’s losses, closing at $19,624/t. Iron ore futures gained ground to $116/mt due to increased steel production seen in China so far in December, which is most likely driven by the need to slowly return to normal capacity levels after complying with government rules to mute production in previous months.
Oil futures gained ground, with WTI and Brent trading at $72.66/bl and $75.26/bl. Precious metals have also strengthened with the falling dollar; gold and silver edged higher to $1,798/oz and $22.52/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 16.12.2021 as of 17:30