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This week will be focused on geopolitics and is likely to see some improvement in metals prices but sentiment remains cautious. Gold’s fall from the highs of May 4 was of 7%, while that of silver, always the more volatile metal, was 15% (from May 5 to June 23) to $22.11. This is a combination of a weakening gold price and an uneasy economic outlook in both the eastern and western hemispheres. In common with gold, silver has started a tentative recovery from the lows and is once again above the 200-day moving average.

Banks, which comprise a large part of the Official Sector, are building higher gold reserves: “Our 2023 survey revealed that 24% of central banks intend to increase their holding reserves in the next 12 months, according to survey by the World Gold Council (WGC) in May this year. Central banks’ US dollar holdings were forecast to decline, in the same survey: “Half of central banks surveyed believe the percentage of reserves in USD in five years will be between 40-50%, while just over a quarter believe it will remain unchanged.” According to the IMF, the percentage was 60% at the start of the year that, down from 71% at the start of the century.

The macro, micro and technical outlook for base metals has been pretty bearish, and it is not surprising that the base metals price index has fallen to six months lows. Market sentiment towards the outlook for a rebound in economic growth within China weakened this year with the release of disappointing economic data.

My colleague Fawad Razaqzada recently noted that the Brent oil price has been testing upwards resistance for several days, but concerns over demand have prevented the bulls from committing to the upside. In recent days the bulls have been given supply side reasons to support an upward move, with news that suggests a tighter oil market in the second half of the year. Could oil move back above $80?

The S&P 500 and Nasdaq 100 were off in morning trade, as debt ceiling talks have yet to produce much progress, despite all the positive rhetoric coming from both sides. The Ukraine war looks to be hotting up, with the risk that commodity prices (and so inflation) will spike. Interestingly, the VIX, Wall Street’s fear index, is creeping up and Gold prices, another risk indicator, were unchanged after recent selling.

Debt ceiling talks were the key motivation for gold and silver price slipping this week. After an intraday high of $2,048 per ounce on 10 May, gold fell below the $1,980-$2,000 support level to stand at [$1,960] at the time of writing. The technical position is weakening for gold and silver. Professional and physical market players are not currently prepared to take directional views. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

Today's focus on the debt ceiling talks combined with poor earnings to weigh on stocks this morning, with Regional Banks struggling to recover from an early sell-off. Inflation and deficit talks weigh heavy on market sentiment, with both being risks to a major sell-off (if a low probability.)

Wall Street was flat calm today after last weeks’ Fed and Payroll news. US Consumer Price Indices (CPI) and Producer Price Indices (PPI), due on Wednesday and Thursday respectively, will give read outs on inflation in April. This is perhaps the major source of market risk this week, and in that light US Consumer’s inflation expectations published today are more interesting than usual.

Upbeat earnings reports and a belief that an interest rate peak is near lifted Wall Street this morning, despite disappointing data on the economy and housing market data. The Federal Reserve is still expected to raise its benchmark interest rate by 25 basis points next week, but then to starting to cut rates by up to 50 basis points by the end of the year. We would invite readers to take a look at our recent research on potentially worrying equity market valuations, ‘Are equity markets too relaxed?’

Indices shrugged off bad news from the banking sector (government is unwilling to intervene in the rescue of First Republic Bank, news reports suggest) and focused on good the tech sector (a favorable earnings report from Microsoft this morning), but in the next few weeks it’s still all eyes on economic data ahead of next week’s Federal Reserve meeting. Today’s reports showed that core durable goods orders fell and retail stocks rose in March, hinting at a weaker economy.

US Indices opened weak and remained under pressure by mid-day. First Republic Bank's depositor flight reminded the market of banking sector nerves. Consumer confidence readings were worse than expected and data suggests the manufacturing sector is under pressure. Corporate earnings have been mixed, and Tech sector giants Alphabet and Microsoft due to report after the close today.

Indices are unchanged ahead of this week's critical earnings and economic reports. Traders remain cautious ahead of tech earnings reports and a set of critical economic data scheduled for release ahead of next week’s highly-anticipated meeting of the Federal Reserve. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

In this, our first Friday Briefing, we provide some context on market valuations and highlight risk at this late, late stage in the Bull market. Stocks have been rising for over 13 years, if we date the last major Bear market low in March 2009. Opinions vary, but typical bull markets are between 7 and 9 years. It’s worth thinking about why this rally was so prolonged, and what might bring it to an end. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

Equity indices were flat, but surprisingly the VIX ‘fear index’ fell below 17 to trade at its lowest level in 15 months. A quarter point rate rise in May is baked into market expectations (which might be optimistic). Earnings disappointed today: Goldman Sachs earnings fell short, Johnson and Johnson cautioned investors. Today’s Chinese GDP numbers raised optimism for its economy, with positive implications for the global economy. For more detailed market commentary go to StoneX Market Intelligence, https://my.stonex.com/.

Natalie Scott-Gray discusses the importance of Peru’s reopening of key mining corridor after a period of significant political volatility: the countries mines are responsible for 12% of global copper output, or 2.8 million tons in 2023; in addition, Peru produces significant lead, zinc, tin, and silver.