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Daily Base Metals Report

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European and US equities weakened today with investors still uncertain about the next step for the global economy as deaths from COVID-19 hit 1m. In the US stimulus measures are the main focus and traders do not believe and agreement is likely. US data saw an increase in consumer confidence to 101.8 up from 84.8 in August. Wholesale inventories also improved in August by 0.5% m/m. Eurozone consumer confidence was negative at -13.9. In the UK, Boris Johnson was forced to apologise for getting his COVID-19 rules wrong, as the governor of the BOE told the government to get an EU trade deal or everyone misses out. 

Metals markets were mostly higher today with only zinc and nickel down on the day. Copper prices struggled following a large inflow of stock, with the market failing above $6,600/t to close at $6,579/; the spread continued to widen and settled at $5/t contango. Lead struggled to gain a footing above the $1,850/t prompting a close off the highs at $1,844.50/t. Nickel was weaker today and failed above the 50 DMA, causing a close at $14,456/t. Zinc also closed lower today at $2,424.50/t, with aluminium closing at $1,783/t.

The energy market came under strong selling pressure today with Brent and WTI both down over 4% at the time of writing. Brent trades at $40.6/bl with WTI at $38.59/bl. Gold and silver were supported today trading at $1,893.30/oz and $24.20/oz, respectively. 



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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.