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Daily Base Metals Report

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US stocks retreated today as disagreements surrounding fiscal stimulus talks continued. While Mnuchin brought up the idea of restarting the talks, the House Speaker Nancy Pelosi stated that there could be no further action without an agreement between the White House and Republicans. In the latest round of presential elections, Trump rejected to participate in a virtual debate with Biden scheduled on October 15th. US jobless claims improved in the week ending on October 3rd, as the claims fell to 840,000. The dollar weakened out to 93.622, and the yield on the 10yr US Treasuries softened into 0.7669%. In Europe, France posted the biggest daily increase in new infections and Italy’s cases spiked to the highest level since April.

Activity on the LME was mixed today, with only lead closing lower. Aluminium was well bid today, as falling inventories pointed to recovering demand, but failed above $1,810/t to close at $1,804.50/t. Zinc was slightly firmer and managed to close just off the day’s highs at $2,365/t. Copper and tin prices were range-bound but closed on the front foot at $6,683/t and $18,137/t respectively. Nickel tested the resistance level at $14,830/t but closed lower at $14,662/t. Spreads have all tightened today, with aluminium and copper tightening into -$15.25/t and -$8.00/t respectively.

Oil futures rose today on the back of the approaching hurricane Delta in the Gulf of Mexico. At the time of writing, WTI and Brent trade at $40.93/bl and $43.08/bl respectively. Precious metals were all stronger today, with gold and silver trading up to $1,889.43/oz and $23.89/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.

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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.