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Daily Base Metals Report

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US stocks fluctuated near record highs yesterday, as markets remain cautious on the prospects of economic recovery. Not even a week after the passage of the US stimulus bill, Joe Biden is planning the first major tax hike since 1993 to help pay for the economic programmes in his next economic plan. The dollar strengthened and the 10yr US Treasury yield softened from the previous day peak to 1.6055%. Meanwhile, the UK 10yr inflation expectations climbed to 3.48%, the highest level since 2008, ahead of the BoE meeting this Thursday. The European stocks were mixed after Germany, Italy and France suspended the purchases of the AstraZeneca vaccine on possible adverse side effects. Chinese shares continued to decline on the back of the liquidity tightening fears.

Metals on the LME have traded higher today, apart from tin, on improving industrial conditions in China. Aluminium gained the most ground, testing the level at $2,235/t but closing below at $2,218/t. Cash to 3-month spread softened into $24.75/t contango. Next in line was zinc, closing just below the key resistance level of $2,860/t at $2,858.50/t. Copper briefly topped $9,200/t; however, resistance at that level triggered a close at $9,144.50/t. Lead prices remained marginally unchanged on the day, closing at $1,963.50/t. Tin was under pressure, closing below $25,400/t at $25,310/t.

Oil futures dropped, erasing previous gains, amid strengthening dollar. WTI Apr-May spread flipped in a contango, signalling oversupply. WTI and Brent dipped down to the lows of $64.13/bl and $67.82/bl. Precious metals were all seen higher, with gold and silver edging up to $1,730.20/oz and $26.18/oz respectively.

All price data is from 15.03.2021 as of 17:30

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.

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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.