Global stocks started the week with a strongly negative tone driven in large by the accelerating lockdown conditions in China. Corporate earnings results for tech companies are to be released this week and will help cement the corporate market performance during the first quarter of the year. The flight to safe havens drove the 10yr US Treasury yield back down 2.76% and the dollar up higher to 101.78. Meanwhile, the euro fell to pandemic lows despite Macron's win in the French election over the weekend. Indeed, China's growing restrictions are stoking fears of further inflationary pressures worldwide, and with the Fed's hawkish rhetoric, the bloc’s performance seems more vulnerable. Elsewhere, UK manufacturers' prices increased at the fastest rate since the late 70s; meanwhile, demand eased, and sentiment dropped.
Metals on the LME exchange buckled today, with some falling by more than 5% on the day down to February lows, as rising COVID-19 cases in Beijing, coupled with Fed raising rates, significantly deteriorated the global demand outlook. As a result of prevalent currency weakness, with the latest drop falling to the lowest level against the greenback not seen since November 2020, China cut the amount of money that banks can have in the FX reserves. Zinc saw the strongest declines, falling below the support level of $4,350/t down to close at $4,168.50/t. Next in line was tin, breaking below the psychological support at $40,000/t to close at $39,858/t. Likewise, aluminium saw strong declines, as the metal closed at early-February lows of $3,090.50/t; cash to 3-month spread tightened into -$9.00/t. Nickel was broadly unchanged on the day as volumes on the exchange continued to diminish; the metal closed at $32,636/t.
Oil futures sold off on the back of a weak demand backdrop, with WTI and Brent falling below $100/bl to $95.49/bl and $99.76/bl. Likewise, robust declines were seen in precious metals; gold and silver fell down to trade at $1,893/oz and $23.56/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 25.04.2022 as of 17:30