Investment sentiment soured today, driven mainly by omicron spread causing the government to tighten lockdown restrictions. Additionally, one of the US senators put a stall on Biden's $2tr plan, leaving few options for reviving it. As a result, we saw Goldman Sachs reducing their US economic growth forecast to 2.0% in Q1 2022, down from 3%, with smaller downgrades seen over the course of the next year. The dollar softened, and the 10yr US Treasury yield gained ground. Elsewhere, China lowered its borrowing costs from 3.85% to 3.8%; while the decline is marginal, the move to lower the benchmark points to government willingness to support the softening economy.
Low liquidity and volatility combined have intensified market weakness across the board, and further tightening of lockdown restrictions should add to the weakness during the Christmas period. Copper declined due to that, falling down to the $9,435/t level to close at $9,446.50/t. Overall, the base metals complex was mixed, only with aluminium seeing continued gains into $2,725/t levels, China imports of aluminium surged in November; the metal closed at $2,671/t. Nickel saw some moderate gains, climbing up to close at $19,340/t. Lead and zinc were both softer, closing at $2,293.50/t and $3,354.50/t, respectively.
Oil futures sold off, as the demand outlook worsened once more, with WTI and Brent falling down to $66.04/bl and $69.35/bl. Likewise, precious metals softened into $1,794/oz and $22.30/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 20.12.2021 as of 17:30