US stocks alongside European markets slid today after the investors digested the news of the sanctions to be imposed on Russia. The scale of the sanctions from the US seems to be limited so far, but more is expected to follow given the persistence of growing tensions. US home loan applications fell to the lowest level since 2019, as higher mortgage rates are starting to turn away potential borrowers, creating additional headwinds for the housing market. The dollar rallied in the second half of the day, and the 10yr US Treasury yield strengthened but struggled to break above 2.00%.
The metals on the LME were marginally softer today as the markets assessed the scale of sanctions imposed on Russia by the West and the impact on the commodities basket in the meantime. Nickel broke below $24,400/t to close at $24,396/t; the cash to 3-month spread eased somewhat into $572/t back. Aluminium and copper both softened to close at $3,292.50/t and $9,866/t, respectively. Iron ore futures gained ground but struggled to break above $140/t once again, driven in part by China’s efforts to support the real estate sector of the economy by encouraging commercial lenders to accelerate loans to companies. The country is also said to meet with port operators to help prevent hoarding of iron ore, which would help create availability in the market, and further push down prices in the longer term. Tin was the only one higher on the day, jumping to test $45,200/t, closing lower at $44,935/t. The main reason behind recent gains has been due to enterprises gradually resuming work after the New Year celebrations; given the trend continues, this should keep supply and demand more balanced in the short term, according to SMM. The question for the longer-term outlook is whether the conflict in Ukraine will push prices high enough for central banks to act aggressively as they begin their tightening cycles this year. In the meantime, however, tensions are causing markets to downgrade the scale and the timing of interest rate hikes.
Oil futures were on the front foot, with WTI and Brent edging higher to $92.67/bl and $9.64/bl. Precious metals were all higher today, with silver rallying higher to $24.47/oz, while gold maintained above $1,900/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 23.02.2022 as of 17:30