1. Reports
  2. Daily Base Metals Report
Non-independent Research

Daily Base Metals Report

Read disclaimer

US stocks strengthened for the second day yesterday as investors assessed the Fed’s monetary policy decision and China’s Evergrande crisis. The dollar sold off, and the 10yr US Treasury yield rallied up to 1.3976%. The 10yr gilt picked up to test the May highs of 0.907% after the Bank of England brought up a possibility of a 2021 interest rate hike to help calm inflation, which is now expected to exceed 4% given the recent energy spike. Meanwhile, Chinese authorities signalled reluctance to bail out Evergrande, as they asked the local governments to prepare for the potential downfall of the company, even after they injected more cash into the financial system. From the monetary policy side, Chinese policymakers left the benchmark interest rates unchanged while holding the 1yr loan prime rate at 3.85%, in line with market expectations.

The LME metals were mostly higher on the day, only with copper closing marginally lower. Zinc saw the strongest gains in the second half of the day, closing near the highs of $3,100/t at $3,091/t. Nickel strengthened to test the resistance level at $19,400/t to close lower at $19,351/t. Aluminium fluctuated but closed higher on the day at $2,949.50. Lead was also stronger, as it was supported above $2,110/t, closing at $2,120.50/t. Copper closed lower on the day despite the mid-day spike reaching $9,385/t levels after the Chinese authorities’ reluctance to bail out Evergrande; the metal closed at $9,273.50/t, and the cash to 3-month spread widened out to $10.95/t.

Oil futures edged higher alongside equities driven by a combination of the higher broader market as well as the weaker dollar. The WTI and Brent futures edged up higher to $73.43/bl and $77.23/bl. Precious metals fluctuated, with gold weakened into $1,751.54/oz and silver up to $22.70/oz.

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

All price data is from 22.09.2021 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.

Sign-up to get the latest Non-independent research

We will email you each time a new report has been published.

You might also be interested in...

Daily Report FX

A morning report covering fundamentals and technicals for USD, EUR, GBP, JPY, and CHF.

Daily Report Softs Technical Charts

Technical analysis and charts for the key sugar, cocoa and coffee contracts.

Weekly Report FX Options

Commentary and analysis covering OTC currency option pricing, volatility and positioning.

FX Monthly Report November 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs, this month we focus on Turkey. Inflation continues to rise and the Central Bank cut rates, as the Fed starts to become hawkish. The report includes a macroeconomic overview as well as desk comments and technical analysis on key currency pairs.

Quarterly Metals Report – Q4 2021

The global macro picture is starting to present some downside risks in the near term as China's economy is set to slow further and supply-chain bottlenecks continue to cap growth. New orders and new export orders in China are contractionary, and we expect demand in Q4. Order backlogs and lead times for products will continue in Q4, limiting growth, and real consumption is weaker than it looks. Higher costs from shipping, raw materials and energy will take their toll on the consumer, and we expect end-user demand to suffer. The final piece of the jigsaw is the reduction in stimulus from central banks and how that will impact financial markets, bond yields, and the dollar has rallied while stocks corrected, but what will this trend continue?