Morning Market Wrap:
US Cash Markets Respond to Powell's Speech:
Good morning, a quick wrap from me today. The US cash markets all closed in the green after Jerome Powell's speech in Wyoming on Friday:
- SPX: +0.66%
- Nas: +0.83%
- Dow: +0.73%
Powell's remarks were widely as expected, with a bit more weight from the market when he mentioned that he would "proceed carefully." To me, that seems to be the only real change in language over the times, as he normally continually reiterates the Fed's determination to bring inflation down. However, odds increased for the next two Fed meetings on a rate hike.
Metals and Macro:
Following the above, we saw yields, USD, and PM's chop around a little. US 10-year yields closed little changed. Gold dipped down to touch the $1900 round number but bounced back to finish at roughly $1914, around where it was in the Australian session close. Silver followed a similar pattern, closing up about 22 cents higher than the Australian session close at $24.22. Silver has largely outperformed gold during this recent upside move by about 7.5%.
Base Metals:
Given the USD moves and overall market dynamics, metals didn't differ much from the PM's and were mostly flat:
- Ni: -0.28%
- Cu: -0.01%
- Al: -0.08%
- Tin: down the most, at -1.1%. So not too much to talk about here.
Energy and Battery Metals:
It appears that Natty Gas and Coal had a little pop back, but both are still trading around the low range, with Sept NEWC trading at $159 and Natty Gas closing at $3.13. Oil found some support in its choppy trade, with WTI closing up about $2 for the session at $80.05. Iron ore is also holding up well, staying at the top of its recent range at around 823 CNY. Lithium Futures came off by about 4.5%, closing at the low end of the range above that 200 area, closing at 204 CNY. I'll be watching around the 190 CNY area on the downside; if the rollover continues, it could put significant pressure on these lithium names.
Local:
Australian futures are pointing to a positive open of +20 points or +0.28%. US futures on the reopen are set to continue from Friday's positive close, with ES up 9 points at the time of writing. Friday's session saw PLS come out with what I personally consider a bit of disappointing guidance and largely "in line" earnings for FY23. A few brokers have already reduced price targets:
- Jefferies: Price Target Cut by 8.3% to $5.50/share.
- Morgan Stanley: Remains Underweight and reduces price target from $4.20 to $3.75.
- Citi: Changes RATING from buy to Neutral, also reduces target price by 5.7% to $4.82.
The Uranium price was up a little more in the US session, with Uranium names holding well. Again, our names were leading their session with positive bids in PDN during the Australian session. BOE provided a bit of a "buy the dip" scenario, as I've been noting lately that the sell-off from market proxy drag could be an opportunity to get into Uranium names where prices are divergent from the overall market. We will see if that trend continues.
Data:
There is no significant data out today or tonight from overseas. We only have the final retail sales numbers from Australia. While it's a final number, so it shouldn't be too variant, it's still essential to be aware of the number just in case. A weaker number in the current market sentiment would probably be seen as positive, as it would indicate economic weakness, which is what the RBA wants to see.
Have a great day.