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Daily Base Metals Report

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US stocks jumped today, following the Chinese equity rally, reaching a one-month high on the back of hopes of a rapid economic recovery in the US and China. The Shanghai Composite index posted its biggest gain since June 2018 on the back of positive global outlook, massively outperforming its US counterparts. The dollar fell for the 5th day consecutively, and the yield of 10y Treasuries advanced. Trump is preparing executive orders on a range of subjects tonight, including China and immigration, with manufacturing incentives being the priority. UK stocks were also higher today as hopes of more stimulus bolstered risk appetite, and construction PMI rebounded to 55.3 for the first time since July 2018.

Positive sentiment on the LME market today, as risk appetite returned to the market. Nickel gained 2.6%, breaking above the key resistance level of $13,300/t to close at $13,336/t. Aluminium prices traded up to $1,635/t, but resistance at this level triggered a close at $1,634.5/t. Cash to 3 months softened today into -$33.48/t. Copper prices also strengthened today, closing near the day’s high at $6,128.5/t. Lead was fairly steady today, gaining ground to close at $1,797/t. Zinc closed higher on the day at $2,063/t.

Oil futures gained today on the back of China’s optimism, with WTI and Brent trading up to $40.95/bl and $43.44/bl respectively. Gold and silver advanced to $17,84.91/oz and $18.28/oz.

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

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COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.