US stocks gained ground following a quiet start of the week yesterday as investors assessed the economy’s resilience against aggressive policy actions. The 10yr US Treasury yield continued to break highs after St Louis Fed President Bullard stated that a 75bps rate hike should not be ruled out; he withdrew his statement later today. The dollar strengthened to 101. The World Bank cut its forecast for global GDP growth this year from 4.1% to 3.2%, with the decision most impacted by Russia’s invasion.
A mixed day of trading on the LME exchange today, with metals struggling to a gain footing on the upside.
Copper strengthened in the first half of the day following the news of disruptions at mines in Peru; the metal’s closing inventory levels continue to edge higher; however, still remain below the long-term average. The metal struggled above the $10,500/t level and closed at $10,304.50/t. Nickel fluctuated as it opened to test $35,115/t but has retreated from the level immediately and managed to close at $33,768/t; cash to 3-month tightened into -$38.50/t. Lead and zinc both closed higher at $2,447.50/t and $4,498.50/t, respectively. The markets are awaiting banks’ benchmark lending rates coming from China tomorrow after the PBoC cut its RRR but refrained from cutting interest rates. However, it seems that the markets are not yet convinced about the economy’s recovery, with the recent release of retail sales pointing to the biggest contraction since the early days of the pandemic. Additionally, China’s property sector contracted by 2% y/y in Q1 2022, even before the lockdown measures were introduced, highlighting the pertaining economic weakness even after the relaxation of containment measures.
Oil futures retreated, ending the four-day rally following yesterday’s hawkish statement. WTI and Brent traded at $102.57/bl and $107.52/bl. Europe’s natural gas prices fell 12% to the lowest level since the start of the invasion after Russia postponed its ruble payment decision until next month. Precious metals weakened in the latter part of the day following the surge in Treasury yields. Gold softened into $1,954/oz; silver is at $25.16/oz at the time of writing.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 19.04.2022 as of 17:30