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Daily Base Metals Report

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US stocks erased this week’s gains following a disappointing corporate earnings report release. The hawkish monetary policy outlook continues to drive the general market sentiment, especially after the Fed’s Powell stated that many officials thought the 50bps hike during the next meeting to be reasonable to curb inflation. The 10yr US Treasury yield remained at just below 3.00%; the 2yr yield, however, climbed higher to 2.71%, as hawkish statements are getting priced in on the short end of the curve. The dollar rose to test 101.33, the level was last seen in March 2020. Elsewhere, the pound fell to the lowest level since November 2020 against the dollar, when the economy was under strict lockdown restrictions, amid signs of slowing growth. Indeed, the S&P Global’s PMI readings for both the service and manufacturing sectors fell to a 3-month low in April, with consumer confidence falling to 2008 levels.

A down day on the LME exchange, as lockdown restrictions in China and hawkish Fed deteriorate global demand outlook. Indeed, growth forecasts for the Chinese economy continue to be downgraded as the country struggles to maintain its activity with the zero-Covid policy restrictions. Copper weakened before breaching support of $10,200/t in the latter half of the day, urging the metal to close the third consecutive week on the back foot at $10,110/t. Likewise, aluminium struggled above $3,290/t as it fell lower to close at $3,245.50/t. Nickel closed lower at $33,107/t. Lead and zinc closed lower at $2,388.50/t and $4,434.50/t, respectively.

Oil futures closed the week on the back foot, as lockdown conditions in China are amplifying the demand fears. WTI and Brent traded at $101.99/bl and $106.45/bl. Precious metals softened once again today, with the hawkish Fed deteriorating appetite for the non-yielding metals; gold and silver edged lower to $1,932/oz and $24.17/oz, respectively.

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

All price data is from 22.04.2022 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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