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Daily Base Metals Report

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US stocks extended this week’s gains after the US existing home sales surged by the most on record in July, as low mortgage rates continued to power the residential markets. US business activity hit an 18-month high of 54.7 in August, as faster growth helped the service sectors. Nevertheless, the uncertainty around further stimulus is raising questions about the near-term outlook. In Europe, stocks were lower today as composite PMI dropped to 51.6 in August from 54.9 in July, highlighting the challenge of growth recovery in the bloc.

Sentiment in the LME turned sour today, and timid economic data and rising dollar added to the decline. Nickel prices were higher on the day, closing at $14,691/t. Copper retreated after an unexpected loss of momentum in the Euro area, falling by 1.61%, and closing at $6,490/t. Copper cash to 3-month spread tightened into $22.00/t backwardation. Aluminium was also weak as protracted selling pressure triggered a close below a key support level of $1,770/t at $1,765/t. Zinc was weaker today, closing at $2,456/t. Lead prices traded lower and closed above the resistance level of $1,960/t at $1,972.50/t. Iron ore closed lower on the day at CNY848/mt. Spreads were mixed today, but we did some moderate tightening for copper and nickel.

Oil futures fell today as economic signals coming from Europe indicated a stalling crude demand, with WTI and Brent trading down to $41.59/bl and $43.69/bl. Meanwhile, American exports to China are set to reach record highs in September as Beijing is seen stepping up trade purchases. Precious metals declined, only with palladium higher on the day. At the time of writing, gold and silver trade at $1,934.75/oz and $26.57/oz respectively.


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