US stocks erased earlier gains as markets focused on the potential impact of tighter monetary policy in the US on the country’s economic growth. This week pointed to intensified central bank stance to quell inflation, even through means of lower economic expansion. The Fed chair Powell said that the central bank is acutely focused on bringing inflation back to 2% and that another hike of 50-75bps is likely in the next meeting. US factory data showed cooler demand as output declined unexpectedly in May, while industrial production increased by 0.2%, but below the market estimate. The 10yr US Treasury yield and the dollar both gained marginal ground. Italian bonds rallied after Lagarde pledged that the borrowing costs of indebted regions would not be allowed to spiral out of control which will limit bond spreads.
Another day of risk-off sentiment from the base metals complex today, with yesterday’s sell-off seen moderating. Recession risks took a toll on the base metal group yesterday, and this sentiment is likely to intensify in the coming months, especially as economic indicators moderate and central banks continue to act aggressively. Copper broke below the $9,000/t support level for the first time since September last year to close at $8,961.50/t. Aluminium saw moderate declines, as it fluctuated around $2,500/t to close at $2,498/t. Lead and zinc closed lower at $2,061.50/t and $3,523.50/t, respectively. Nickel is the only metal that managed to trade higher day on day as it closed at $25,669/t. Iron ore futures plunged for the seventh day straight, falling below $120/mt, as China’s covid-19 policy is triggering concerns in regard to industrial disruptions; the metal closed at $120.03/mt, the level not seen since January.
Oil prices sold off today as the futures closed the week down 9.00% following the Fed’s hawkish tilt. WTI and Brent now trade at $111/bl and $113/bl, respectively. Moderate softness was seen across precious metals, with gold and silver falling to $1,841/oz and21.64/oz.
For more in-depth analysis of base and precious metals, our Q2 2022 Quarterly Metals report is out now!
All price data is from 17.06.2022 as of 17:30