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Daily Base Metals Report

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The US stocks gained yesterday as a dip in the Treasury yields provided some tailwinds to the gains. Inflation continues to be a key driver in driving the equity markets, exemplified by data published by the NABE that states that more than 60% say that inflation is a greater risk now than it has been in the last two decades. The 10yr Treasury yield softened, falling back below 1.70%; the dollar weakened. Germany is aiming to borrow $286bn more in 2021 to help mitigate the continued impact of the pandemic, whilst Merkel agrees to lockdown extensions in the country. In Turkey, the markets tumbled by 7.60% after the news of the central bank governor being replaced; the lira fell by 9.15% against the dollar.

Prices on the LME were stronger yesterday as risk appetite returned. Aluminium prices challenged resistance at $2,289/t and the prices closed near the day’s highs at $2,272/t. Zinc was the biggest winner as protracted buying pressure prompted a break of resistance at $2,860/t, and closed higher at $2,866/t. Nickel remained supported above $16,400/t, closing marginally higher on the day at $16,463/t; the cash to 3-month spread widened out to -$46.64/t. Copper was stronger closing on the front foot at $9,108.50/t. Elsewhere in the metals market, COMEX copper prices edged higher edging close to record highs and closed at $4.13/lb. SGX iron ore prices also improved and closed at $151.20/t.

Oil futures fluctuated as investors assessed the uneven demand outlook, with WTI and Brent seen at $61.20/bl and $64.23/bl. Precious metals were all weaker; gold and silver fell down to $1,739.64/oz and $25.72/oz respectively.

All price data is from 22.03.2021 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.

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.

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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.