US stocks softened marginally today as markets turned their attention to commodities, and the prospect of further inflation increases if these levels persist. With inflation running hot even before the invasion, the risks that persistent high prices will pose to consumer spending are further exacerbated. Germany’s statement to rule out discussion surrounding the Russian energy ban might help to take some steam out of the market, but the compounding effects of this crisis is still likely to send consumer prices in Europe to breach new highs. The dollar was marginally higher, and the 10yr US Treasury yield shot back to the 1.77% level. Elsewhere, China’s exports rose by 16.3% y/y in the January-February period, slightly above market forecasts, but down from a 20.9% growth seen in December, a sign of stable trade performance in the first two months of the year; while steel exports declined 19% y/y to 8.23mt, the value of shipments grew by 34.4%. In Germany, factory orders grew for the third straight month in January, driven by foreign demand.
Performance on the LME diverged massively today, with the majority of metals currently down on the day. Nickel, however, had an unprecedented run, jumping as much as 70%, and continued to break higher above $48,000/t to close at $48,078/t; cash to 3-month tightened into $841/t, the largest backwardation since 2007. Prospects of major shortages of metal, as well as a potential ban on Russian oil imports from the US, squeezed nickel to the second-highest level seen on the exchange; the record high was at $51,800/t in June 2007. Copper hit an all-time high of $10,845/t before selling off in the second half of the day after Germany ruled out the discussion surrounding the Russian energy ban, as the economy struggled to secure energy for essential needs elsewhere. Copper closed at $2,448.50/t. Lead and tin were marginally lower on the day, closing at $2,448.50/t and $46,735/t, respectively.
Oil futures opened higher from Friday’s close on the prospect of a ban on Russian supplies. It has, however, begun to decline in the second half of the day after Germany’s statement. WTI and Brent closed the day higher day-on-day at $119.95/bl and $123.44/bl. Palladium rallied as much as 14%, up to a record high of $3,442/t, on concerns of shortages coming from Russia, but this level was not sustained, and the metal fell back to $3,017/t. Gold and silver were mixed.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 07.03.2022 as of 17:30