Rate Cut Hopes Dashed: New York Stocks and Non-Ferrous Metals Plummet Amid LME Market Weakness
[Industry News]
New York Stock Exchange and Non-Ferrous Metals Market Weak Amid Economic Recession Concerns
The New York Stock Exchange started the day with a slight consolidation on September 6th but then declined due to selling caused by growing concerns about an economic recession.
The U.S. nonfarm payrolls for August, announced before the opening, increased by only 142,000, falling short of the 160,000 expected. This led to anxiety about the job market and the U.S. economy expanding as the previous month and the month before were confirmed to have been significantly revised downward.
Federal Reserve Governor Christopher Waller stated that it was time for the Fed to take action, making a September rate cut a possibility and leaving open the possibility of a 50bp rate cut. However, this was not enough to prevent a market selloff.
Experts say the market is now weighing how aggressive the Fed will move in September based on the data coming out, with the FedWatch tool putting the odds of a 50 basis point cut at about 25%.
The yield on the U.S. 10-year Treasury note is currently at 3.71% after a volatile day, while the dollar has also strengthened after a series of ups and downs, with the index up about 0.17% at 101.27 points.
Non-Ferrous Metals Market Ends the Week Weak
The non-ferrous metals market ended the week mostly weak. Tin rose slightly, but it was more of a technical rebound from the weakness seen earlier in the week. The overall mood in the non-ferrous metals market was gloomy, with copper down 1.3% and aluminum down 1.5%.
LME copper rebounded to $9,175 per tonne during the session, aided by a weaker dollar following the release of the U.S. jobs data. However, it eventually turned weak as investor sentiment weakened due to the widening stock market decline and the dollar rebounded.
Experts are citing weak demand conditions in China, with analysts at Citi expecting weak manufacturing PMIs in the coming months. This suggests investors will need more time and positive data to build meaningful positions.
The current market is repeatedly showing a pattern of rising sharply and then falling again when news comes out in a bearish phase. As we are at a critical juncture of entering a rate cut cycle, it is thought that a conservative approach will be necessary for the time being until uncertainty is resolved.
Data: NH Nonghyup Futures