Commodities To Extend Gains
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Editorial, Market Moves, Market Watch
In the week ending March 3, markets were more erratic as a fresh batch of positive US economic statistics impacted risk appetites and investors grew more optimistic about stimulus announcements at China's National People's Congress.
Hotter-than-expected inflation numbers in some of the euro zone’s largest economies, better-thanexpected services PMI in the UK and EU, along with some dovish comments by a Fed official reversed gains in the Dollar index.
"Although new business growth surged to a nine-month high and the rate of backlog building was the greatest since last June, the S&P Global Eurozone Services PMI was also lowered lower in February 2023, to 52.7, but it is still the fastest rate of expansion in the service sector since June 2022. "
In the week ending March 3, markets were more erratic as a fresh batch of positive US economic statistics impacted risk appetites and investors grew more optimistic about stimulus announcements at China's National People's Congress. After four weeks of advances, the Dollar index ended the week with a small dip. It had increased by 2.7 per cent at the end of February, marking the first monthly growth since November 2022. The dollar rose to a seven-week high of 105.359 throughout the week as US statistics and Fed officials' reiteration of their hawkish position increased the likelihood that interest rates will rise in the US for an extended period.
While core inflation, which excludes food and energy, increased from 5.3 to 5.6 per cent, headline inflation in the eurozone decreased to 8.5 per cent in February from 8.6 per cent the previous month but was higher than the prediction of 8.3 per cent. Although new business growth surged to a nine-month high and the rate of backlog building was the greatest since last June, the S&P Global Eurozone Services PMI was also lowered lower in February 2023, to 52.7, but it is still the fastest rate of expansion in the service sector since June 2022.
On predictions of a higher peak for US rates, COMEX gold prices fell to a two-month low earlier in the week, close to USD 1,810 per troy ounce. February saw a 4.8 per cent drop, the worst monthly drop since mid-2021. Ten-year Treasury bond yields are already over the 4-per cent mark as traders are now projecting the peak US interest rates for this year at 5.4 per cent, up from just over 5 per cent a month ago. Yet as the Dollar fell later, Gold surged past USD 1,850 per troy ounce and increased by 2.5 per cent. In keeping with the rebound in gold and base metals, COMEX Silver ended the week 3.4 per cent higher. Nonetheless, iShares Silver holdings and SPDR Gold holdings also had withdrawals during the last week, indicating that investment demand is still poor.
Past fortnight saw a relatively positive trading for crude oil prices as expectations for strong Chinese demand overcame worries about tighter US monetary policy. After fluctuating between gains and losses as a stronger Dollar weighed on the complex, base metals experienced a positive turnaround in the final session of the week and closed with respectable gains. Meanwhile, better than anticipated PMI numbers and housing sales data from China fueled hopes of a recovery in demand from the world's largest consumer.
The manufacturing PMI grew from 50.1 in January to 52.6 last month, the highest level since April 2012, according to China's National Bureau of Statistics, while the non-manufacturing indicator increased to 56.3 from 54.4.