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Daily Base Metals Report

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US stocks fell yesterday, despite positive economic data, as investors once again weighed on the prospect of rising inflationary pressures. Additionally, the prevailing concerns surrounding the semiconductor shortages stoked this debate further. US initial jobless claims continue to fall to pandemic lows, with the most recent figure down to 498,000 on the week ending May 1st. Meanwhile, US mortgage rates fell to the lowest level in three months, increasing the buying power for Americans. The dollar softened, while the 10yr US Treasury yield continued to decline. The employment report is out today, and it is expected that the US added about 1m jobs in April, below what was seen in March.

LME metal prices were well bid today as risk appetite re-emerged. Aluminium prices were firmer, heading for the third straight gain, however lack of appetite for prices above $2,490/t triggered a close at $2,488.50/t. Copper prices broke through the resistance of $10,100/t but closed lower at $10,092/t. Zinc prices were also higher and closed at $2,943.50/t; cash to 3m spreads tightened up to -$13.75/t. Lead prices opened on the front foot today, breaking through the key resistance level of $2,210/t to close at $2,218/t. Nickel prices were down on the day, closing at $17,937/t. SGX iron ore rallied, breaking above $196/mt for the first time, to close at $195.47/mt.

Oil futures slipped as the prevailing coronavirus crisis in countries such as India continues to complicate the demand outlook. WTI and Brent fell down to $65.22/bl and $68.63/bl. Precious metals were mostly higher, with silver and gold rallying to $27.37/oz and $1,815.71/oz, as the dollar and Treasury yields continued to decline.

All price data is from 06.05.2021 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.

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.