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Daily Base Metals Report

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Positive sentiment continues to drive the stock market, with S&P 500 seen touching a record high, despite a weak economic backdrop. The US jobs data disappointed, as it increased by just 49,000 in January, with the jobless rate falling to 6.3%; weekly hours worked jumped. This data is likely to pressure Biden to push for additional stimulus checks soon. The 10yr US Treasury yield strengthened up to 1.1497%, while the 2yr yield touched the lows last seen in May 2020; the dollar softened. On the COVID-19 front, data shows that Chinese vaccine administration to population share falls considerably behind the US and Europe, delivering a little more than two doses for every 100 people. Meanwhile, Russia is in talks with China to test a combination trial of their shorts to better protect against the virus.

Prices on the LME were seen higher today as risk appetite prompted the market. Aluminium prices broke above $2,015/t, with prices seen closing at $2,015.50/t. Aluminium cash to 3-months tightened up to -$3.25/t. Nickel saw the strongest gains today, breaking above $18,000/t to close at the day’s highs at $18,029/t. Tin rallied, heading for a record weekly streak, as concerns over diminishing supply drive the market; the metals tested $23,200/t before closing lower at $23,123/t. Copper prices also strengthened today; prices closed near the day’s high at $7,912.50/t. SHF copper closed on the front foot at CNY57,900/mt. Zinc was supported in the first half of the day, testing $2,670/t to close at $2,665.50/t. Lead range-bound, closing marginally higher on the day at $2,052.50/t.

Oil futures climbed today, with Brent falling short of $60/bl, as global supply expectations continue to tighten. At the time of writing, WTI and Brent trade at $56.79/bl and $59.37/bl. Precious metals were higher on lacklustre US labour data boosting the need for a greater stimulus; gold and silver are seen at $1,814.59/oz and $27.03/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.