Morning Market Wrap
U.S Markets: Cash equities finally had a bit of reprieve from yields as they came off their 16-year highs from 4.68% and rolled a little down to 4.57%, still elevated by all means. However, we had been seeing (as we have been talking about in the morning meetings) that underlying bid in equities. We saw some of this weakness in yields in the Aus session late, so there was scope to get that little bump.
- SPX: +0.58%
- DOW: +0.35%
- Nas: +0.84%
Nothing out of this world, but a little bounce into the Friday session is always good vibes. :)
Macro and Metals: Gold and Silver are dynamic metals in that they are inverse with yields (mechanically speaking) and inverse with risk (mechanically speaking). So in an environment where we see yields off smalls and equity risk up, we have a double positive for the PM's in that risk on that equities provide puts pressure on PMs while yield reprieve should "help them" somewhat, in this certain scenario. It makes sense due to their elevation on the larger picture of yields for them to come under pressure on the slight increase in equities risk behavior! Anyway, all that just to say: Gold off a bit more - when we came in yesterday, it had dropped to 1900 (not surprising given the events) and closed around 1875 USD. This morning we come in, and it's down another $10, closing at 1864 USD. Silver again holding okay, basically flat overnight.
Base Metals: Ni: -0.09% (flat) Cu: +1.24% (get it, girl) (Chart attached) Al: +1.88% Tin: -1.73% (breaking to bottom of range)
Interestingly, Copper bounced off recent lows, and Aluminium is actually holding better in the short term than all of them, getting up to about a 4-month high, closing at $2,280 USD/t. It could actually be interesting. A bit convoluted in the space at the moment with some up, some flat, and some down - a bit of a basket case sector.
Energy and Battery (The good stuff) NEWC Coal is still sitting at the top of the range around 161-164, depending on Oct/Nov contracts but same same movements. Coal names have been super bid, and as have the overseas majors BTU etc., on absolute tears, so I can't see any reason really as to why structurally. We will see how that pans out if Coal prices don't follow. Natty Gas, sitting close at 2.949 USD Nov contract, in the middle of a 6-month range.
Oil: WTI closing at 91.81 USD a Bazza, off 1.46%, also giving equities a bit of reprieve! (Remember oil is the canary in the inflation coal mine at the moment check how much the yields and oil track one another as cause and effect really- chart attached)
Lithium: We got the highly anticipated and widely ignored weekly AND fortnightly pricing in for lithium spot prices. Some serious pricing coming through here, yet the market honestly does NOT care. The bid in PLS last week has been astounding, leading me to think "something" is going on there (time will tell). But let's reveal the lithium pricing:
Weekly Prices:
- Hydroxide: 160,000 CNY/t -5.88%
- Carbonate 165,000 CNY/t - 2.8%
Fortnightly Spodumene Price (Here is the kicker!!):
- Spodumene min 6% Li2O: $2,250 -23.73%
US Lithium sector stages a decent bounce following the Aus session strength yesterday across the sector board. ALB SQM both up around 6% - nothing to be sneezed at! And definitely shouldn't be ignored. As I keep saying, it takes days and days for these lithium stocks to drop x amount and about 3 hours to unwind that on a positive session, so you can see the sensitive side. And from a risk-reward point of view.... that's not a way to live shorting them every day (like I have been - the struggle has been real - profitable, but real). Flipped to a small PLS long yesterday, so it's got to see the ignorance across the board in Aus liths shall continue. One thing having a bias, and another thing is being able to trade those ebbs and flows. The market says long - get long! lol Earnings are gonna be fiiiiine lol
Now let's get to the good stuff: URANIUM: Uranium price up (again) overnight indicating closing $72.90/lb +1.25% with offer stepping back. I feel we only see continuation unless something random happens. And like I said yesterday morning, Brokers will be upgrading price decks on these also as they are (again) behind the curve. And lo and behold, We saw Bells and Canna upgrade pricing and price targets and pricing models.
Bells upgrading price targets of:
- BOE: from $3.90 to $5.53
- PDN: From $1.12 to $1.31
Will await the rest of them. Also, haven't seen all the lithium bulls capitulate yet and roll their lithium losses into the uranium highs yet so feel there is more room to go (Jokes - but also not really, lol)
Iron Ore: Closed night session and now closed until Oct 9th for Golden Week in China. Not too sure if Lithium pricing will be the same (maybe that's the move in lithium stocks, no daily fluid futures to headwind them down. But will update you more on whether they trade next week, as I am pretty sure last holiday Wuxi futures still traded. but I KNOW Dalian Iron ore futures won't trade.
Data (Syd time): No Local data today. 4:00 pm UK Q2 GDP. 10:30 pm U.S PCE numbers. These should be highly watched as they are a forward indication of inflation. SO beware if these come in hot - you know, yields, oil land all that! lol It's actually probably a decent market risk event so just be aware. if it's as expected, it will be nothing burger, but risks are there.
Also: Daylight savings kick in this Sunday for the Daylight savings states in Aus, which will push US markets out for them. and markets will open at 9 a.m. for us QLD bogans. China closed for the week for national holiday Golden Week also reopening on Oct 9th
Feel like I've missed some things but can't think now so, That's it from me have a great day.