US stocks drifted sideways on the back of solid economic data coming out today. US manufacturing performance cooled in January, with the ISM gauge falling to 57.6, the lowest since November, amid surging omicron cases across the country. US job openings, however, rose unexpectedly in December, with quits declining slightly, suggesting robust labour market performance during the month; we did, however, see a deterioration of labour market performance throughout January. We have heard from the Fed’s Bank of Philadelphia President heavily favouring the four 25bps hikes this year, one starting next month. Indeed, the markets are seeing fresh bounds of volatility sweeping across the markets after the Fed statement, as investors became cautious whether tighter monetary policy might be detrimental to economic growth. The dollar softened, and the 10yr US Treasury yield was 1.80%. Meanwhile, the German 2-yr bond yield climbed above the ECB’s current deposit rate of -0.5% as investors anticipate rate hikes this year.
Most metals gained ground today, with tin and lead softening marginally. Copper was well supported as uncertainty continues regarding the Fed’s rate hike path. The market traded through to $9,700/t to close at $9,696.50/t, with the cash to 3month spread reaching $65/t. Nickel was supported to test resistance around $22,950/t, but we saw some weakness this afternoon and closed off the highs at $22,764/t. Iron ore and steel continue to be well supported once again, with the SGX iron ore contracted trading at $138.90/t, ever closer to $140/t. Lead and tin closed on the back foot, at $2,234.50/t and $42,763/t, respectively.
This week, oil futures edged higher ahead of the OPEC+ meeting, with WTI and Brent trading at $88.32/bl and $89.45/bl. Precious metals gained ground, with gold and silver edging to $1,805.92/oz and $22.72/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 01.02.2022 as of 17:30