US stocks declined strongly today following yesterday's respite, as investors assessed the impact of tighter monetary policy outlook on the financial markets. Yesterday, the Fed's Powell stated that the central bank would raise interest rates until there is clear evidence of easing inflation. Chicago Fed President Evans also added that he sees a 50bps hike next month as reasonable. The dollar remained comfortable around the 104 level, and the 10yr US Treasury yield weakened marginally to 2.92%. Elsewhere, European new vehicle sales contracted for the 10th straight month in April, with manufacturers struggling with supply chain issues and inflation plateauing at a record high. UK inflation rose to the highest level in 40 years of 9.0% y/y, adding pressure on the central bank that hiked rates to 1.00% two weeks ago.
A risk-off momentum drove the downward sentiment across the metals today, as they all fell day-on-day. Copper fluctuated but maintained the downward trend, falling below the support of $9,250/t to close at $9,2358/t. Aluminium started the day on the front foot, testing the resistance level of $2,930/t before closing lower at $2,857.50/t. Whilst Shanghai saw an easing of lockdown restrictions, the shortage of transport workers across China should mean that supply chain bottlenecks will not be resolved as quickly as one would expect. Lead and zinc closed lower at $2,054/t and $3,620/t, respectively.
Oil weakened, with the selloff later on in the day driving the decline, as China's demand outlook dampened the sentiment. WTI and Brent softened to $110.20/bl and $109.72/bl. Precious metals were mixed, with gold seeing an upside to $1,822/oz; silver was at $21.58/oz.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 18.05.2022 as of 17:30
