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Daily Base Metals Report

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US stocks declined today on the back of disappointing banking financial results. Biden’s newly-announced $1.9tr stimulus plan came under scrutiny, muting the positive sentiment. US retail sales declined by 0.7% m/m in December, confirming the pain the economy felt in the last months of the year due to increased lockdown restrictions. Meanwhile, the US consumer sentiment cooled down in January, highlighting continued market uncertainty despite vaccine improvements. On the vaccine front, the US government is urging states to speed up the rollout of a vaccine as infections continue to surge. The dollar strengthened, and the 10yr US Treasury yield weakened out to 1.0852%.

Metals prices were weaker today due to weak economic data and a stronger dollar, apart from tin that closed on the front foot at $21,100/t. Copper prices sold off to test appetite at $7,910/t, but support at that level triggered a close at $7,949/t. Zinc saw the strongest selling today, down 2.29%, closing at the day’s lows at $2,699/t; cash to 3-month spread tightened to -$8.00/t. Aluminium remained under pressure, closing at $1,991/t. Nickel tested the $17,800/t level and closed higher at $18,007/t.

Oil future slipped on the back of a stronger dollar, with WTI and Brent edging down to $52.37/bl and $55.10/bl. Precious metals were lower on the day; gold and silver are trading $1,831/.80/oz and $24.77/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.