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Daily Base Metals Report

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US stocks fell by the most since October, with S&P 500 down 2% on the day, as investors adopted more of a risk-off sentiment. The Fed is expected to make dovish statements in the press conference tonight. Orders for the US equipment rose by 0.6% m/m, the eighth month of positive growth, as manufacturing remains to be the bright spot for the economy. The dollar strengthened to 90.555, and the 10yr US Treasury yield weakened to 1.0110%. The euro was down on the day after the ECB statements that the markers are underestimating the possibility of a rate cut. On the vaccine front, the disagreement between the EU and AstraZeneca delivery delays continues. Meanwhile, the UK tightened the travel measures and warned that lockdown measures to be in place until early March.

Sentiment on the LME has been predominantly negative, mostly a reaction to vaccine rollout concerns, and prices slipped on the downside. Copper was weak and traded towards support at $7,800/t; the market LME closed at $7,825/t. Nickel was the also subject to strong selling pressure testing the support at $17,700/t to close at $17,916/t. Aluminium was also marginally weaker as well and tested appetite around $1,990/t, support at this level prompted a close at $1,992/t; cash to 3-month spread widened out to -$3.50/t. Lead and zinc closed lower on the day at $2,045/t and $2,583.50/t respectively.

Oil futures were seen marginally higher, with WTI and Brent edging up to $53.04/bl and $56.18/bl. Precious metals were also softer; at the time of writing, gold and silver trade at $1,846.46/oz and $25.31/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.