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Daily Base Metals Report

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U.S. equities whipsawed today after the market failed to hold onto the highs as the tech sector suffered marginally amid earnings and the BOE raising rates once again. Economic data continued to confirm slower growth across the globe, and the U.K. construction index was contractionary at 48.9, down from 52.6. Continuing claims in the U.S. were 14.16m, up from a revised 13.68m the week prior, as the initial jobless claims reached 260,000, with NFPs tomorrow. The dollar was weaker today as markets continued to battle the Fed about the prospects of the U.S. economy. The 10yr yield in the U.S. was marginally softer at 2.68%. The U.K.'s 10yr rallied to 1.88%.
Metals rallied today as the microeconomics came into play as energy costs will continue to rise in H2 2022. We saw zinc surge higher and test $3,550/t, prices closed marginally below this level at $3,450.5/t, and the cash to 3-month spread closed at $126/t back. Glencore highlighted the futures tightness in zinc, with Europe producing 30% of ex-China metal, and zinc tightness is expected to remain the case in the coming months. Aluminium prices reached $2,406.5/t, fractionally off the highs and as the electricity and energy story plays out, we expect more upside due to supply risk for aluminium and zinc. Tin was marginally higher to close at $24,545/t, and lead closed just off the highs at $2,045.5/t after testing $2,050/t. Copper failed to gain a footing on the upside as summer volumes took hold. The market closed at $7,727.5/t, with the cash to 3-month spread at -$7.75/t contango. 
Oil prices continued to fall, trading at $93.85/bl and $88.15/bl for Brent and WTI, respectively. Saudi increased the price for buyers in Asia as the market tightness is expected, dislocation from the market activity and fundamental outlook. We attribute this to macro sentiment. 
All price data is from 04.08.2022 as of 17:30


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