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Daily Base Metals Report

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US stocks climbed yesterday after strong economic data supported market optimism; companies that would benefit from the structural recovery gained the most. Biden is said to unveil the budget proposal that would realise the annual spending to $6tr in the coming fiscal year, causing debt to rise to about 120% of GDP over the next decade. Initial jobless claims fell to 406,000 in the week ending May 22, the fourth consecutive decline, as more Americans are getting vaccinated. Meanwhile, orders for business equipment climbed by more than forecast, underlining the string capital investment recovery. Pending home sales, however, fell unexpectedly, as the inventories continued to decline. The dollar was marginally unchanged and the 10yr US Treasury yield rallied up to 1.6182%.

LME metal prices were well bid today as risk appetite re-emerged. Aluminium prices were firmer, with prices breaking above $2,460/t to close at $2,481/t. Copper prices tested the $10,250/t resistance level and closed at $10,221/t. Nickel saw the biggest gains, trading to $17,925/t, and closing at the day’s high at $17,898/t; cash to 3-month spread widened out to -$40.00/t. Zinc prices firmed in the second half of the day, breaking above $3,060/t to close at $3,061/t. Iron ore prices were on the front foot after a 6-day consecutive decline after Biden infrastructure report news; the metals closed at CNY1,101/mt.

Oil futures erased losses, however, still weighted down by the negotiations in Iran. WTI and Brent picked up higher to $66.61/bl and $69.13/bl. Precious metals were mixed, with gold and silver trading higher up to $1,891.66/oz and $27.77/oz respectively.

All price data is from 27.05.2021 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.

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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.