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Daily Base Metals Report

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US stocks rose yesterday on the back of positive economic data. US initial jobless claims posted a larger-than-expected decline, falling to 364,000 in the week ending June 26th, a fresh pandemic low as the labour market continues to recover. US manufacturing continued to expand in May, however at the slowest pace, and the material costs jumped to the highest level since the late 70s. Meanwhile, European factories are benefiting from the economic rebound, with manufacturers reporting the fastest pace of hiring in at least 24 years. US Mortgage rates fell below 3%, which is more likely to keep powering the housing rally. The dollar gained ground, and the 10yr US Treasury yield was at 1.4781%. The pound weakened after the BoE Governor urged policymakers not to overreact to rising inflationary pressures, as he believes them to be temporary.

Metals prices were weaker yesterday due to weaker-than-expected construction data and a stronger dollar, apart from tin that closed on the front foot at $31,294/t. Copper prices softened to test appetite at $9,316/t, but support at that level triggered a close at $9,322/t. Zinc saw the strongest selling today, closing at the day’s lows at $2,938.50/t; cash to 3-month spread widened out to -$16.50/t. Aluminium remained under pressure, closing at $2,512/t. Nickel tested the $18,000/t level and closed higher at $18,105/t.

Oil futures climbed with OPEC+ signalling a gradual supply hike; WTI and Brent picked up higher to test $76.22/oz and $76.74/bl. Precious metals were mixed, with gold and silver trading at $1,771.22/oz and $25.99/oz, respectively.

For more in-depth analysis of base and precious metals, please see our Quarterly Metals Report.

All price data is from 01.07.2021 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.