Attention shifted away from the Fed to the UK today, where the BoE has decided to hike the interest rate by 25bps. While this was in line with the market expectations, the policymakers’ comments in regards to the rising inflation of 10.0% in Q4 and upcoming recession in 2023 have dented market confidence, causing the pound to fall to June 2020 levels against the dollar. US stocks reversed yesterday’s gains as investors questioned the effectiveness of the Fed move to combat the persistently high inflationary environment. The 10yr US Treasury yield jumped above 3.00% while the dollar jumped but remained below the previous resistance of 104. As a result, US mortgage rates ticked higher, breaking above the August 2009 highs of 5.27%. Meanwhile, US productivity dropped by the most since the late 40s in Q1, while labour costs surged, and the job market remained tight. US initial jobless claims increased slightly to 200k in the week ending April 30th.
In line with the US stock markets, metals on the LME softened in the latter half of the day, with the stronger dollar driving the downside sentiment. Zinc once again saw the strongest losses today, falling to close at $3,904.50/t. Next in line was nickel, as the metal fell below the support of $30,050/t to close at $30,114/t. Aluminium and copper softened after testing the resistance of $3,020/t and $9,750/t to close at $2,916/t and $9,489.50/t, respectively. Iron ore gained ground, closing higher on the day at $145.22/mt.
After the oil embargo introduced by the EU, Germany said it expected the bloc to turn its sights on Russian gas once the ban on oil is in place. WTI and Brent fluctuated, trading lower day-on-day at $107.16/bl and $109.79/bl, respectively. Gold and silver weakened, with the latter falling more than 2.5% down to $22.38/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 05.05.2022 as of 17:30