Metal prices under pressure as recession looms across the globe

US stocks slumped on Tuesday in a volatile trading session as investors weighed what strong economic data and rising rates mean for the Federal Reserve’s aggressive tightening campaign.

The Dow Jones Industrial Average fell 0.55 per cent, but was off the lows of the day, boosted by defensive stocks such as Johnson & Johnson and Coca-Cola. The S&P 500 slipped 0.41 per cent. The Nasdaq Composite slid 0.74 per cent notching its seventh day of losses, its longest since 2016.

At the same time, bond yields surged, adding to the rout in stocks. The yield on the US 10-year Treasury jumped to 3.353 per cent at one point in the day.

The move came after August ISM data Tuesday morning was stronger than expected, coming in at 56.9 versus expectations of 55.5. The ISM monthly survey is considered to be a key indicator of the state of the US economy. Better-than-expected economic data may mean that the central bank continues to act aggressively in hiking interest rates.

In the holiday-shortened week, investors are looking ahead to speeches from Federal Reserve presidents and a fresh rate hike decision from the European Central Bank due out later this week.

Across the sectors, defensive sectors performed well with real estate the standout. Weaker industries included software, Chinese internet, media and entertainment, homebuilders, housing retail, travel and leisure underperformed.

A brief summer rally in the prices of industrial metals has sharply reversed as the worsening energy crisis in Europe and signs of a slowdown in manufacturing behemoth China spook traders. The S&P GSCI index of industrial metals has dropped more than 9 per cent since mid-August

The gauge, which tracks the spot price of metals including copper, nickel and aluminium, is down 17 per cent in 2022. Goldman Sachs said commodities were pricing a recession more than any other asset class writing “Excessive recession fears continue to grip commodity markets

The fear of recession is being felt across the globe, Britain is the most likely to enter into recession, and has the highest inflation rate among that group, according to Deutsche Bank. A difficult job for new Britian Prime Minister Liz Truss . Her country is seeing a flight of foreign investment with a deteriorating financial outlook pushing the pound to 1980s-era lows.

Currencies

USD Dollar index was up 0.7 per cent with greenback up over 1.5 per cent vs yen.

One Australian dollar has weakened by ½ cent compared to the US dollar yesterday, buying 67.41 US cents (Tue: 68.02 US cents), 58.51 Pence Sterling, 96.22 Yen and 68.02 Euro cents.

Bitcoin futures were down 5.6 per cent, below $19K.

Commodities

Iron ore futures are pointing to a 1 per cent fall.

Gold lost $9.70 or 0.6 per cent to US$1713 an ounce.

Silver was up $0.03 or 0.2 per cent to US$17.91 an ounce.

Copper added $4.85 or 1.4 per cent to US$346.20 a pound.

Oil was flat at US$86.88 a barrel.

Futures

The SPI futures are pointing to a 0.5 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris added 0.2 per cent, Frankfurt gained 0.9 per cent and London’s FTSE closed 0.2 per cent higher.

Asian markets closed mixed. Tokyo’s Nikkei closed flat, Hong Kong’s Hang Seng fell 0.1 and China’s Shanghai Composite closed 1.4 per cent higher.

Yesterday, the Australian sharemarket lost 0.4 per cent to 6827.

Ex-dividends

There are 18 companies set to trade without the right to a dividend.

Amcor PLC (ASX:AMC) is paying 17.26 cents ufranked
Austal (ASX:ASB) is paying 4 cents ufranked
AUB Group (ASX:AUB) is paying 38 cents fully franked
AVJennings (ASX:AVJ) is paying 0.67 cents fully franked
Brambles (ASX:BXB) is paying 17.25 cents 35 per cent franked
Clearview Wealth (ASX:CVW) is paying 2 cents fully franked
Healius (ASX:HLS) is paying 6 cents fully franked
Idp Education (ASX:IEL) is paying 13.5 cents 14 per cent franked
Insignia Financial (ASX:IFL) is paying 11.8 cents fully franked
Kip McGrath Education Centres (ASX:KME) is paying 1 cent fully franked
Meridian Energy (ASX:MEZ) is paying 9.9993 cents ufranked
Medibank Private (ASX:MPL) is paying 7.3 cents fully franked
Pacific Group (ASX:PAC) is paying 23 cents fully franked
Probiotec (ASX:PBP) is paying 3.5 cents fully franked
Seek (ASX:SEK) is paying 21 cents fully franked
Thorney Opportunities (ASX:TOP) is paying 1.4 cents fully franked
Universal Store (ASX:UNI) is paying 10.5 cents fully franked
Viva Energy Group (ASX:VEA) is paying 13.7 cents fully franked