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Daily Base Metals Report

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We saw risk-off sentiment captivate financial markets today. Strong selling pressure caused risk and safe-haven assets to weaken amid rising COVID-19 restrictions. In Europe, we continue to see cases rise, the probability of more lockdowns is also rising, which will hinder economic recoveries and prompt governments to prolong stimulus measures, increasing debt levels, a worry for fiscally weak countries. U.S. equities have weakened, taking the lead from major European indices which all closed down over 3%. Christine Lagarde has tried to instil calm into European markets after suggesting there is the capacity for further stimulus if needs be.

LME sentiment was weak today as protracted selling pressure gripped the market due to COVID-19 uncertainty and a supported US dollar. Zinc lost the most ground, after failing above $2,550/t to break through support at $2,500/t and close at $2,458.5/t. Nickel broke back below $15,000/t and found support at $14,300/t to close at $14,541/t. We saw protracted selling pressure cause the copper market to close below $6,700/t at $6,691.50/t; the cash to 3 spreads have widened as well to $27/t back after closing at $40.25/t on Friday. Lead and Aluminium prices also closed lower today at $1,888.5/t and $1,779.5/t, respectively.

Oil prices did not escape the sell-off today with market participants pointing to Libya bringing oil back to the market, likely to increase an already rising OPEC+ supply. Brent trades at $41.28/bl with WTI at $39.02/bl, at the time of writing. Silver and gold were subject to strong selling pressure and trade at $24.35/oz and $1,902/oz,  respectively at the time of writing.

Risk warning

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.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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