Yesterday saw insane volatility in metals markets, and it’s back again today with silver down 12 per cent, gold 6 per cent, and copper is down 3 per cent to below $600. Yesterday, all three hit record highs before prices cratered under the weight of their own excess. It had hallmarks of a technical sell-off rather than a fundamental change. We are seeing extreme volatility in metals and currency markets, leading to serious dislocations and may well gnaw away at equity market sentiment. The sharp reversal in metals took the shine off the FTSE 100’s rally, with the index dropping sharply in tandem with the move in metals to finish barely higher on the day. Earlier, the FTSE 100 had hit a fresh record high as mining stocks were propelled higher.
Gold had been shifting to the downside through the session after approaching $5,600 before selling really took off a little time after 3pm, generating liquidations and a momentum of its own, with prices tumbling about 8 per cent in just a few minutes to a low of $5,023/oz, over 10 per cent below the earlier all-time high. Prices stabilised somewhat and then moved above $5,300 within about 90 minutes of the flash crash. Moves in silver were even more exaggerated as prices tumbled 12 per cent from a high above $121.67 to $106.67 in short order before rallying back to $113 by 4:30pm.
The pressure is back on this morning. Copper is down another 3 per cent to $600, around 9 per cent below yesterday’s highs. Gold tanked to $4,939 in early trading in London before climbing back to $5,100, while silver took a $103 handle. Both have since moved down again to $5,000 and $100, respectively. A lot of speculative positioning to unwind, and it could get quite nasty. We need to see what kind of damage this move has done – it may be the start of a more sober assessment by market participants about the reasons for being bullish on gold, silver etc.
European stock markets are off to a mixed start. The Dax has added about 0.8 per cent after tumbling yesterday on a dreadful day for heavyweight SAP. The FTSE 100 is flat, having rallied to a record high in the prior session before ending up only a bit higher. It’s now going to be a tricky phase for some of the miners who’ve been bid up on the rally in gold and copper.
Yesterday saw big swings on the S&P 500. Meta rallied 10 per cent and Microsoft dived 10 per cent as divergent narratives about AI spend and revenue growth emerged at the heart of the Mag7. Memory storage is super hot; SanDisk shares jumped 20 per cent on blowout earnings.
US stock futures fell, and the dollar climbed off its lows on reports that Donald Trump will name Kevin Warsh as the next chair of the Federal Reserve today. He was quite a hawkish governor back in the day, and he favours shrinking the Fed’s balance sheet, though he has since said the Fed should be cutting rates; otherwise, he would not be getting the job. He’s seen a bit more of a hawk perhaps than the market had wanted/expected and could restore a bit of faith in the institutional independence of the Fed, which is a critical point.
Apple announced record earnings thanks to stunning iPhone demand. Q1 revenue came in at $143.76bn vs $138.4bn estimate, with Greater China and iPhone revenue comfortably beating estimates after “unprecedented iPhone demand” in the quarter. Finally, SpaceX is said to be weighing a merger with Tesla and an alternative tie-up with xAI ahead of a possible IPO, per sources, as Elon Musk considers consolidation. Tesla shares are up 3 per cent after-hours after falling that much yesterday.
By Neil Wilson, investor strategist at Saxo UK
