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Daily Base Metals Report

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US shares fluctuated yesterday, with tech stocks leading the way, as closer-than-expected interest rate hikes might weigh on the future market performance. The Fed stated that the risk of inflation is escalating and began the discussion around the scaling on bond purchases. US jobless claims rose to 412,00 in the week ending June 12 for the first time since late April, as the economy continues to recover. The dollar rallied, and the 10yr US Treasury yield softened to 1.5040%. The BoJ rate decision is out today and is expected to remain unchanged.

The rally in metals continued to stall yesterday as concerns surrounding inflationary pressures spurred expectations of the pullback of stimulus support. Copper prices sold off to test appetite at $9,272/t, the lowest level in two months, but support at that level triggered a close at $9,315.5/t. Zinc was next in line, down 4.05%, closing at the day’s lows at $2,911.50/t; cash to 3-month spread widened out -$13.50/t. Aluminium remained under pressure during the second half of the day, closing at $2,400/t. Nickel tested the $17,100/t level to close at $17,174/t.

Oil futures dipped amid dollar strength, with Iran signalling that it is closer to reaching the nuclear deal agreement. WTI and Brent softened into $70.52/bl and $72.63/bl. Precious metals were also down on the day, with gold and silver falling down to $1,773.98/oz and $25.85/oz, respectively.

All price data is from 17.06.2021 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.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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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.