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Daily Base Metals Report

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The new quarter has seen US equities continue to rally, but gains were modest in Europe today with the Dax weaker. The dollar decline continued to 93.72 at the time of writing, despite US ISM manufacturing showing strong grow at 55.4. Personal spending and income were 1% and -2.7% respectively for August. Initial jobless claims were 837,000 with continuing claims at 11.76m. Brexit talks continue and there are still differences on the UK's state-aid policy and access the EU boats. 

Metals on the LME came under heavy selling pressure today, with copper the worst affected. Protracted selling pressure and a rejection of prices above $6,700/t caused prices to take out multiple support levels and close at $6,387/t. Zinc was next in line as prices struggled above $2,400/t to close $2,326.50/t. Nickel managed to find support at $14,210/t and closed at $14,343/t with the cash to 3-month spread at $38.75/t. Primary aluminium broke below support at $1,750/t to close at $1,739.5/t, as LME inventories decline. Lead was weaker as well today but was supported below $1,800/t to close at $1,807/t.

Energy prices were also down today as the market continues to fear for demand due to uncertainty surrounding the US stimulus package. Brent and WTI trading at $40.52/bl and $38.24/bl respectively. Gold and silver acted like traditional safe havens today, gaining ground to $1,909.50/oz and $24.02/oz respectively. 

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.