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Daily Base Metals Report

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US stocks retreated after a disappointing economic performance being released today, as we saw inflation and tight market conditions trickle through to the demand side. US retail sales fell by 1.9% m/m, the most significant decline in 10 months, as inflation deteriorated consumer spending. Persistent inflationary pressures, coupled with the omicron-led outbreak, have also caused US consumer sentiment to decline in early January; consumers now expect inflation to rise 4.9% over the next year, vs 2% that the Fed will aim to bring it down to. Likewise, US factory output growth declined in December, driven by material and labour shortages putting pressure on manufacturers. The dollar softened, and the 10yr US Treasury yield jumped higher. Elsewhere, German GDP fell by 1% in Q4 2021, with the last decline seen in Q1, when the economy was through tough lockdown restrictions.

LME prices edged lower after US retail sales declined in December. Copper traded through $9,750/t to close at $9,719.50/t. Zinc weakened back to $3,521/t as data suggests exports improved by 15.6% Y/Y in November, the metal closed at $3,521/t. Aluminium weakened to close at $2,976.50/t. Selling pressure was weaker across the other base metals, but tin continues to hold above $40,000/t, closing higher at $40,351/t.

Oil futures closed the fourth straight week on the front foot, making it the longest-running streak since October on signs of tightening market conditions and resilient demand-side despite omicron risks. WTI and Brent traded higher to $83.00/bl and $85.25/bl. Precious metals have all weakened, with gold and silver falling to $1,818.64/oz and $22.94/oz, respectively.

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All price data is from 14.01.2022 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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