The EU referendum vote and the shock decision by 52% of the UK’s population to leave caused immediate shock waves throughout global financial markets: European stocks, the British pound, euro and global share prices all plummeted in the immediate aftermath, whilst safe-haven assets such as gold and the dollar rocketed up. Yet the base metals complex seemed to register only a small bump from the event, recovered quickly and is now higher than it was before the vote. Why is this? The base metals complex has climbed 10% on average since January 1 on the London Metal Exchange. Zinc has been the star performer, up 28.0% to date, with tin in second at 16.4%. Lead is the only metal to have lost since January 1, down 1.2%, while nickel is up 7.0%. Copper is up 2.8% to date and aluminum 8.9%. Sentiment improving before the vote With market expectations leaning towards a remain vote in the week before the result, metals were moving in an upward direction largely due to improved sentiment rather than any apparent shift in fundamentals. Possibly because of short-covering in anticipation of a remain vote, Commitment of Traders showed speculative net short positions of copper on
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Source: CTRM Center