US stocks rose as investors awaited minutes from the Federal Reserve later on in the evening to help gauge the outlook for monetary policy tightening in the coming months. The 50bps hikes at the next two meetings are no longer a certainty as the markets have begun to price in softer rate increases by the end of the year, with the 10yr US Treasury yield softening further into 2.73% today, the lowest level since late April. US durable goods orders rose by 0.4% in April, down from 1.1% in March, as demand for goods remains expansionary while slowing month-on-month. The dollar shot back up to 102.2. Markets are expecting another rate cut from the Russian central bank after it cut the rates twice by 300bps each meeting in April, as it announced an unscheduled emergency meeting for this Thursday. The ruble continued to extend gains; however, the momentum relative to previous sessions slowed.
Base metals complex on the LME extended the declines on the back of weak China’s macroeconomic outlook. In the meantime, two of China’s biggest provinces, Jiangsu and Zhejiang, are raising power rates for factories because they missed energy efficiency targets, with the latter doing so to cover higher natural gas costs. This will put significant pressure on the metal manufacturing profits, especially on lead, the production of which takes place in the above-mentioned areas, that are already diminishing. Lead saw the strongest losses, falling below the support level of $2,110/t to close at $2,103.50/t. Aluminium continued to decline marginally, with the metal falling to $2,874/t. Likewise, copper saw moderate losses after it tested support at $9,300/t to close at $9,373/t. Zinc closed lower at $3,750.50/t.
Oil was mostly range bound today on the day after US crude stockpiles fell less than expected. WTI and Brent remained at $109.83/bl and $113.67/bl. Precious metals weakened ahead of the Fed minutes, with gold and silver falling to $1,845/oz and $21.83/oz, respectively.
For more in-depth analysis of base and precious metals, please see our Quarterly Metals report.
All price data is from 25.05.2022 as of 17:30