Commodities took another whacking last week, led by oil and iron ore, but gold perked up and silver jumped.
Oil sold off for most of the week but staged a small rally on Friday after the US jobs report for April came in more strongly than expected, helping to send Wall Street higher, with assistance from a reasonable quarterly report from Apple the day before.
Iron ore prices ended under $US100 a tonne for 62% Fe fines at $US98.70 a tonne – down 3.6% for the week.
That was the lowest the Singapore Exchange commodities market priced iron ore at since December 1, 2022.
Other websites had the price around $US100 to $US101 a tonne but easing towards six-month lows.
Reuters said iron ore prices remain “under pressure from declining demand caused by a prolonged decline in production at some Chinese steel mills. Some companies carry out maintenance during this period of uncertainty in the market, so as not to incur more significant losses.”
“Steelmakers have completely lost hope for the economic recovery of China and the resumption of the construction season in the country. These factors are depressing the demand for steel and the mood in the iron ore market.”
We get a timely update on China’s current appetite for iron ore from the country’s April trade data on Tuesday and production, investment and retail sales a week tomorrow.
Iron ore imports topped 100 million tonnes in March and a record 292 million tonnes for the first three months of the year.
Gold closed lower on Friday after the unexpectedly strong US jobs report.
Comex Gold for June delivery was down $US30.90 to US$2,024.80 an ounce. Comex silver rose 3.8% to $US25.90 an ounce.
Comex copper rose 0.04% for the week to close at $US3.8715 a pound for another lacklustre week.
The US economy added 253,000 new jobs in April, well ahead of the consensus estimate for a rise of 180,000 and an equal 50 year low of 3.4%.
The rise showed the economy may still be growing despite high interest rates and could pressure the Federal Reserve to back away from an expected pause in rate hikes.
US markets still expects the central bank to hold off from another raise to rates in June, despite the strong jobs report.
Hourly wage growth jumped to an annual rate of 4.4% in something of a surprise after a rise of 0.4% in April.
Wednesday’s Consumer Price Index data on Wednesday is the next big test for markets, especially those investors thinking the Fed has finished lifting rates.
The US dollar gave up early gains following the jobs report, with the ICE dollar index last seen down 0.09 points to 101.2. The Aussie dollar added 0.8% on Friday to end at 67.49 US cents.
That was up 2% for the week, helped by the Reserve Bank’s 0.25% rate rise last week which offset the impact of the Fed’s 0.25% rise a day and a half later.
Bond yields were higher. The US two-year note was last seen paying 3.908%, up 7.4 basis points, while the yield on the 10-year note was up 4.4 basis points to 3.44.
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West Texas Intermediate (WTI) crude settled up 4.05% on Friday at $US71.34 after hitting a high of $US71.81 earlier in the session while Brent settled up 3.86% at $US75.30 hitting a high of $US75.75
Despite those gains, both marker crudes ended the week lower.
Over the week, WTI Crude dropped 4.4% and Brent closed down -5.33% for the third losing week in a row.
