US stocks declined for a fifth straight day as robust US performance stoked expectations of prolonged interest rate hiking from the Federal Reserve. US manufacturing steadied in August as it held at 52.8, while cost measures declined for a fifth straight month, a welcoming sign of easing inflationary pressures on producers. US initial jobless claims fell by 5,000 in the week ending August 27th, highlighting the labour market might be able to withstand the pressure coming from further monetary policy tightening. US mortgage rate continued to climb higher, reaching 5.66%, the level not seen since June. The dollar tested 110, and the 10yr US Treasury yield edged into 3.26%. Elsewhere, London stocks continued to fall, declining for a ninth day, putting them on course for their worst run since the beginning of the pandemic.
Metals sold off today, continuing to remain under strong pressure, after China put Chengdu, a city of 21m residents, under lockdown, stoking fears of further economic deceleration than a gentle recovery. The zero-covid policy introduced by the government is set to continue to dampen growth potential. In August, we saw China’s factory activity contract, falling to 49.5, according to the Caixin Manufacturing PMI index, below the market estimates of 50.0. Copper continued to fall, breaching support of $7,600/t to settle at $7,597/t, the lows not seen since late July. Zinc and tin took on the brunt of the decline as the metals fell by 6% and 8%, respectively, to close at $3,529.50/t and $21,060/t. Nickel once again opened on the low, at $20,800/t and fell further to $20,311/t.
Oil sunk further as the latest round of covid restrictions in China threatens global demand prospects. The WTI and Brent now trade at $87/bl and $93/bl. Gold and silver were seen moderately lower at $1,694/oz and $17.80/oz, respectively.
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All price data is from 01.09.2022 as of 17:30