US stocks surged at the opening today, energized by the positive figures from the ADP Employment Report. This report, which serves as an early indicator of employment trends before the detailed monthly data is released on Friday, outperformed expectations with a significant increase in private sector job growth, reporting 184k new jobs compared to February's 140k. Investors are now looking forward to the unemployment data due on Friday, which will offer more clarity on the US labour market's status. A tight labour market could prompt the Federal Reserve to delay the onset of its easing cycle. In contrast, the Eurozone's Consumer Price Index (CPI) for March came in lower than anticipated at 2.4% YoY, a decrease from February's 2.6% YoY. The core inflation rate also dipped, moving from 3.1% YoY to 2.9% YoY. Furthermore, unemployment in the Eurozone saw a slight increase in February, reaching 6.5%. These figures suggest that the ECB might be the first to reduce interest rates, with forward swaps currently indicating nearly a 100% chance of an ECB cut versus a 60% likelihood of a Fed cut in June. Consequently, the USDEUR pair declined to 0.924, while the dollar index dipped to 104.36, and the yield on the 10yr US Treasury note crept up to 4.4%.
Metals rallied today, given continued risk-on appetite that gripped markets earlier this week. A notable surge in speculative activity on the LME, paired with expectations of relaxed monetary policy outlook in Europe, has propelled metal prices to their highest levels in several months. Despite this broader optimism, iron ore futures—a gauge for sentiment towards China's economy—saw a decline, suggesting that the renewed confidence may be spreading unevenly across global markets. The anticipation of monetary policy cutting cycle and ongoing geopolitical tensions are expected to further ease the pressure that has been felt by base metals in recent months. In particular, aluminium breached a key resistance level of $2,400/t, closing at a high not seen since April 2023. Likewise, copper breached the recent high of $9,164/t to $9,262.50/t. Lead and zinc jumped higher as well to $2,085/t and $2,548/t, respectively.
Precious metals continued their upward trajectory, with gold climbing to $2,283/oz and silver to $26.75/oz. We expect the forthcoming months to be favourable for precious metals, given the potential onset of monetary easing by major central banks and the increasing uncertainty surrounding the outcome of the US elections. Oil prices also advanced amidst growing tensions in the Middle East, following the bombardment of Iran's consulate in Damascus. Both WTI and Brent Crude increased, trading at $85.9/bl and $89.8/bl, respectively.
All price data is from 03.04.2024 as of 17:30