Morning Market Wrap
Overnight Markets:
We arrived this morning post the CPI prints from the US markets. The data came in mixed but largely in line with expectations. The increase in the cost of gasoline was the standout in the data, as expected from the previous Morning Wrap Commentary on the recent oil price. Market closures were mixed:
- SPX: +0.12%
- Dow: -0.2%
- Nas: +0.39%
Utilities were the best-performing sector, up 1.2%, while the worst was Oil Services, down 2.13%.
Macro and Metals:
The US 10-year yield spiked through recent highs on the data, then rolled back over. I believe the headline triggered algorithmic trading, but diving into the data and recognizing the gasoline weighting skew provided a good trading opportunity for those using their brains rather than knee-jerk algorithms in a thin market. On numbers like this, markets become very thin and can whip around. The 10-year yield closed at 4.254%, slightly down from where we were at this time yesterday. Gold and Silver also experienced choppy movements, with silver finishing at $22.83, near recent range lows, and Gold closing above $1900 at $1906, roughly four-week lows.
Base Metals:
- Nickel: +1.14%
- Copper: +0.04%
- Aluminum: +0.52%
- Tin: +0.69%
There isn't much to talk about regarding base metals at the moment. They are in no man's land, with no clear drivers or themes. They are just drifting, so I won't waste time discussing them until something develops.
Energy and Battery:
Oil took a breather overnight, closing at about the same level as yesterday when we opened. Iron ore is still sitting around range highs at 858 CNY/t. It looked like it might try to break the 865/70 area a couple of days ago but sold off and returned to the top of the range. We're still keeping a close eye on it for any significant moves. Iron ore-related stocks seem reluctant to push higher on it. Lithium prices were slightly down again overnight, with Wuxi Futures at 181.5, down 2.68%. US lithium stocks had mixed performance, with many of them hitting new 52-week lows. Uranium continued to surge higher, with an indicative price at 63.44/lb, almost breaking recent highs. Australian names have been struggling to maintain a bid in recent days. Regarding price action, it's uncertain today whether names will follow recent patterns of gapping up and selling off or gapping up and grinding higher. It's hard to predict at the moment. Natural gas and thermal coal are still ranging, but thermal is trading up 3.38% at 168 for the Oct contract, breaking above the recent six-month range. This is a positive development for NEWC coal.
Local:
Australian futures are looking at a slightly lower open today, with futures pointing down only 5 points or 0.07% - almost flat. After a few struggling days and post-CPI, it wouldn't be surprising to see a slight bid in the session, but we'll trade it as it comes.
Data (Australian Sydney Time):
Australian unemployment data is due at 11:30 am, so keep an eye out for that. US initial jobless claims will be at 10:30 PM, but the main event tonight will be the PPI numbers from the US at 10:30 PM, along with retail sales at the same time. So, there's a lot happening then! Both numbers, if variant, can move markets, so be aware.
That's it; I'm off to find some sweet money-making trades. Have a great day!