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

Daily Base Metals Report

Read disclaimer

US stocks tumbled as the global recessionary fears resurfaced after the Fed-driven rally fizzled out. The US central bank hiked interest rates by 75bps yesterday, the sharpest move since 1994 and held a possibility of another high interest rate hike next month, given economic data. The policymakers, however, expect inflation to peak and begin to moderate right about now. The US Treasury yields continued their increase, but resistance at 3.50% caused it to settle at 3.32%. Disappointing economic data also weighed on sentiment later on in the day, with mortgage rates surging past 1987 highs of 5.78%, further increasing pressure on homebuyers and the market in general. At the same time, new home constructions in the US dropped by 14.4% y/y in May, the lowest in more than a year, highlighting the trend of diminishing demand. Elsewhere, European bond yields fell as the franc shot up higher following a surprise rate hike from Switzerland. Likewise, BOE hiked interest rates by 25bps today and has said it is prepared to unleash bigger moves if necessary.

Metals across the board declined today, with only lead closing higher, as higher interest rates elevate global recession worries. Aluminium saw the biggest decline, as it fell below the support of $2,560/t to close at $2,504.50/t, the lows not seen since July last year. Australia is currently facing power shortages, with 8m people have been told to turn off their lights if they have a choice. The question of whether aluminium smelters are able to perform will strongly depend on their power supply structure. The country’s biggest aluminium smelter Tomago Aluminal’s power supply, is said to be little impacted by the outage, given their long-term contact agreements. However, rising energy prices are already seeing trickling down to electricity prices and are likely to bring the input costs for smelters higher. Copper edged higher in the first half of the day before weakening to $9,074.50/t. Nickel and zinc closed lower at $25,259/t and $3,577.50/t, respectively. Only lead closed higher at $2,101/t.

Oil futures fluctuated strongly today following the Fed decision. WTI and Brent are trading around $115/bl and $118/bl, respectively. Precious metals shrugged off the Fed decision later on in the day as markets flocked to the metals as safe havens; gold and silver increased marginally day on day to $1,845/oz and $21.80/oz, respectively.

For more in-depth analysis of base and precious metals, our Q2 2022 Quarterly Metals report is out now!

All price data is from 16.06.2022 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.

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

Our FX Options Report contains commentary and analysis covering OTC currency option pricing, volatility and positioning. This week’s focus is on EURCHF following the surprise rate hike from the Swiss central bank last week. 

Quarterly Metals Report – Q2 2022

Our analysts provide an in-depth analysis of the metals market and current macroeconomic conditions. Central Banks are raising rates to curb inflationary pressures and the cost of living crisis in the Euro area and the UK. Economic data and consumer demand are weakening and market sentiment has been impacted accordingly. This, in conjunction with lockdowns in China, has caused demand for metals to soften and shift the Chinese market into surplus, but supply chain logistics have tightened the European market. The easing of lockdowns will boost sentiment and prompt a rally in the near term, but the market is moving into selling rallies as opposed to buying dips.

FX Monthly Report May 2022

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we look at the current inflation outlook across LATAM, Europe, U.S. and U.K. and gauge if central banks will slow their rate hikes. Economic data is weakening and China's poor growth and woeful demand could impact policy makers' decisions.