Sector movers: Miners pace gains as BoE and SNB surprise, gold jumps
By Alexander Bueso
Date: Thursday 21 Mar 2024
(Sharecast News) - Miners topped the leaderboard on Thursday as investors digested dovish central bank meetings in the U.K. and Switzerland.
The Monetary Policy Committee's two hawks both pulled in their horns on Thursday and stopped calling for a hike in Bank Rate, whereas the consensus was that only one would go down that path.
According to Derek Halpenny at MUFG, that "justifies some increased probability of an earlier than we expect rate cut in June although whether the BoE ultimately moves in June or August remains a close call.
"We maintain our view of 100bps of cuts this year."
That served to push Sterling down by 0.85% to 1.2676 versus the Greenback, which in turn lifted the top-flight index to within a whisker of its all-time highs.
The shift in tone from central banks was underscored by a surprise rate cut out of the Swiss National Bank, which also underpinned U.S. dollar gains on Thursday.
In the background, top officials at the Federal Reserve surprised traders a bit overnight by sticking to their median forecast for three rate cuts in 2024.
Furthermore, Fed chief Jerome Powell had labelled the recent overshoot in inflation as "bumps in the road".
It was those projections and remarks that were behind the sharp gains in front month gold futures earlier to a fresh record high of $2,246.60 and US dollar weakness overnight.
Three-month LME copper futures had topped the $9,000 per metric tonne mark and were trading at 11-month highs.
Analysts at SP Angel linked the move in copper to the Fed's decision, while noting a Bloomberg report of a record amount of bullish SHFE contracts of more than 500,000 during the past week.
As regards the outlook for Fed policy, analysts at Rabobank were telling clients that: "We still expect three rate cuts in 2024, starting in June.
"Assuming a Trump victory in November, leading to a rebound in inflation caused by a universal import tariff, we expect the Fed to pause its cutting cycle after two rate cuts in 2025."
Top performing sectors so far today
Precious Metals and Mining 8,975.50 +4.31%
Retailers 3,926.04 +3.85%
Industrial Metals & Mining 6,247.81 +3.50%
Leisure Goods 25,973.46 +2.96%
Medical Equipment and Services 11,001.00 +2.89%
Bottom performing sectors so far today
Automobiles & Parts 1,299.96 -5.21%
Tobacco 26,542.13 -0.62%
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