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Daily Base Metals Report

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US stocks rallied today from yesterday’s lows amid good corporate earnings and economic data. US initial jobless claims fell by 67,000 in the week ending January 23rd, by more than expected, signalling that job cuts may be easing. Meanwhile, the US economy grew by 4% annualised rate in the last quarter of the year, while down from 33.4% growth in Q3, still in line with market expectations. The dollar weakened and the 10yr US Treasury yield strengthened up to 1.0534%. From the virus front, the US recorded the first case of the South African variant, while Germany decided to exclude people aged 65 and above from vaccinations using AstraZeneca, as it casts doubts on its effectiveness.

Sentiment on the LME market was mixed once again. Aluminium prices were softer today, testing support at $1,970/t; however, the market held above this level to close at $1,984.50/t. Nickel prices failed into resistance at $17,950/t, and the market closed at $17,800/t. Copper prices were supported above $7,700/t and closed at $7,873/t, the spread tightened slightly into $3.75/t backwardation. Tin and zinc continued to move higher, closing at $22,995/t and $2,592.50/t respectively.

Oil futures edged lower after a rise seen in the US equities. At the time of writing, WTI and Brent trade at $52.47/bl and $55.60/bl. Precious metals were seen marginally lower, with gold and silver down to $1,842.20/oz and$25.90/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.