US stocks continued their decline on the signs of persistent geopolitical tensions in Ukraine. The Fed minutes outlined the central bank’s willingness to tighten soon and that the policymakers are on alert for persistent inflation to justify the faster pace; the timing or the pace of tightening, however, was not mentioned. US initial jobless claims rose by 23,000 in the week ending February 12th; while this is the first weekly incline in a month, the increase was primarily driven by growth in the South and Midwest regions of the country. US housing starts declined by 4.1% in January, as high material costs and labour shortages stifled production; however, the number of homes authorised but not yet started points to healthy performance in the coming months. In the meantime, the US mortgage rate rose to 3.92%, the highest level since May 2019, putting additional pressure on future homebuyers. The dollar was unchanged, and the 10yr US Treasury yield fell below 2.00%.
Metals fluctuated but caught a bid after the US renewed the warning of a possible invasion by Russia. As a result, nickel rose to test the key resistance at $24,000/t, the highest level since mid-Jan, to close lower at $23,886/t; cash to 3-month spread is at $315/t. Aluminium was little changed, as it fluctuated around recent highs at $3,240/t, closing at $3,268/t. Copper was the only one down on the day, closing lower at $9,929/t. SMM expects the average daily output of aluminium and copper to rise by 0.6% and 0.3% sequentially, respectively, in February as smelters in provinces such as Yunnan, Shanxi, and Inner Mongolia, resume curtailed activity. Zinc and lead were both marginally higher, closing at $3,606/t and $2,346/t, respectively. Iron ore futures continued to decline, falling below $130/t after China told iron ore trading firms to release excessively high inventories in a move to help cool prices.
Oil futures declined at the start of the day as markets continued to face a bound of volatility. WTI and Brent trade at $92.06/bl and $93.21/bl. Precious metals improved as safe-havens, with gold and silver edging higher to $1,896.95/oz and $23.82/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 17.02.2022 as of 17:30