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Daily Base Metals Report

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US stocks edged higher today on hopes of the stimulus bill to be reached before November 3rd, the election day. US housing starts increased by 1.9% m/m in September, indicating a continued housing demand up until the end of Q3. The dollar was weaker and the yield on 10yr US Treasuries strengthened up to 0.7773%. In Europe, Brexit trade talks are likely to continue at least into next week if the UK and EU fail to reach an agreement.

LME metal prices were well bid today as risk appetite re-emerged. Copper prices were firmer, however lack of appetite for prices above $6,950/t, triggered a close at $6,899/t. Nickel prices broke through the resistance of $16,000/t and closed higher at $16,023/t. Zinc prices were also firmer and closed at $2,529.50/t; cash to 3m spreads widened out to -$17.50/t. Lead prices opened on the front foot today, breaking through the key resistance level of $1,780/t to close at $1,765.50/t. Aluminium prices were down on the day, closing at $1,834.50/t.

Oil futures declined today as nations re-imposed the lockdown measures, daunting on demand. Russia said they will wait another month before making decisions on production cuts. At the time of writing, WTI and Brent trade at $40.72/bl and $42.59/bl. Gold and silver were both higher on the day, edging up to 1,911/55/oz and 24.78/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.

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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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.