Oil continues to slide
Oil remains under pressure this morning. Global recession fears were amplified yesterday by Fed Chair Powell’s testimony to Congress, where he said that a soft landing for the US was very challenging but that more rate hikes are still needed to contain inflation. We can see from the chart the slide in WTI and Brent Crude.
In his testimony before Congress yesterday, Jerome Powell conceded that a US recession is “possible”, however, he also stated that the US economy is currently strong enough to withstand the aggressive monetary policy tightening. He also said that future rate hikes would be data-driven, with the magnitude being determined from meeting to meeting.
The Rand remains rangebound for now as it trades at R15.92 this morning. Local CPI data yesterday showed inflation at a 5-year high of 6.5%, reinforcing the likelihood of a further 50bps rate hike at next month’s MPC meeting. We still see the Rand within the broader R15.00 to R16.00 range.
Concerns from the US Fed surrounding the potential for slower US economic activity and a rise in Chinese COVID-19 cases have pushed the price of copper to a 16-month low this morning, at $8,650 per tonne. Copper could possibly test $8,000, where the next resistance level comes in.
US bond yields fell and the dollar slipped after Powell’s testimony yesterday raised concerns of a recession in the US. The DXY is lower at 104.10 with the Dollar trading at 1.0575 and 1.2260 against the Euro and Pound respectively while the Yen has recovered to 135.55. Wall Street ended marginally in the red last night, US futures are flat this morning, and there have been good gains for Chinese stocks.