After the flash crash yesterday, markets were nervous ahead of the Fed. Equities across the globe rallied, European stocks were marginally higher, but U.S. stocks, while volatile, are in the green and gaining ground. Volatility remains high, with the VIX still holding above 30 but retreating from 35. The dollar index was marginally softer today, trades at 103.43, and near-term resistance stands at 104. The market has priced in a 50bp hike, and the focus will focus on the sustained pace of the Fed as opposed to May's decision. The U.S. 10yr struggles into resistance at 3%; euro bunds continued to sell off as the ECB is stuck between a rock and a hard place.
Prices on the LME struggled, and zinc and aluminium fell sharply. Zinc has been well supported this year, with funds holding long positions. Worries about Chinese demand have triggered another leg lower in metals; zinc settled at $3,961.50/t, with the cash to 3-month at $36/t. Aluminium broke through support at $3,000/t to test $2,900/t, and the market closed at 2,911/t and the cash to 3-month at -$35.75 contango. Copper also suffered from protracted selling pressure as the correction continues, prices trading at $9,403.5/t. Nickel traded lower and closed at $30,975/t. Despite promises from China about stimulus, the market remains concerned about consumption; iron ore edged lower today and trades at $141.30/t.
Energy prices also suffered, with Brent and WTI trading at $105.86/bl and $103.41/bl. Silver struggled to gain a footing on the upside today, and gold was bid but struggled above $1875/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 03.05.2022 as of 17:30