- The prospect of a wall of money coming from the US government to underpin the economic recovery in that country has seen the broader base metal group remain topside focused. The world’s bellwether for economic growth namely copper is strongly bid in Asia this morning. The benchmark 3m LME contract printed a $8077.50/tonne at 05:10 am local time, while the March Shanghai Futures contract advanced by some 0.5% to $9195.46 tonne
- Zambia state owned mining investment firm ZCCM-IH stated that it expects to find new investors for the Mopani Copper mines by the end of the year. The IMF is said to be looking at the governments acquisition of the mine from Glencore stating that it was not consulted about the deal. Zambia is currently seeking support from the IMF following its debt default in 2020 and taking on any further debt does not form part of a debt sustainability strategy required by the IMF before it provides with any assistance.
- Yesterday’s Biden inauguration went smoothly without any hint of disruption or trouble. It also drew much support from the global community as world leaders all welcomed the dawn of the Biden administration. It will signal a material shift in economic policy that will have its conse-quences, if not initially then down the line. For now, Biden’s inauguration is likely to usher in a period of quitter diplomacy, less grandstanding and more traditional relations between countries and the US.
- Just as former President Trump went about signing executive orders as he came in to the White House, so too did President Biden yesterday. Biden has finalised seventeen separate executive orders aimed at aggressively dismantling Trump’s legacy. These included halting the con-struction of the Mexican Wall, reversed the travel ban from Muslim countries, gave directives to reverse the exits from the WHO and the Paris Accord and halted any projects that might undermine climate change efforts. Looking ahead, Biden will want to re-engage global trading part-ners and re-establish cordial diplomatic ties to restore America’s role in major international debates, while turning his attention very squarely to dealing with the Covid-19 pandemic in the very near-term and co-ordinating the vaccine rollout and other measures to mitigate some of the impact of lockdowns.
- Focus through the next two weeks will also quickly shift to the emergency economic stimulus package that will likely be forced through Con-gress by virtue of the Democrats holding control of both the House and the Senate. This will usher in a new era of economic policy that will be less conservative and more socially minded, especially with Janet Yellen expected to take control of the Treasury. Her views were made abun-dantly clear earlier this week where she highlighted the need to stimulate now and worry about paying down the debt at a later stage.
- Shifting to the FX market, the Kwacha continued its journey north of the 21.000 mark, as the USD-ZMW reached a fresh high, according to Reu-ters data. Optimism around the Biden administration, calmer international relations, which will focus on reversing trade wars, added to the sig-nificant stimulus efforts of both the Federal Government and the Federal Reserve, will mean that the USD will continue to be undermined. Speculative positions remain firmly against the USD for the time being, while the improved risk appetite will assist higher beta and risker cur-rencies gain more ground against a greenback that remains fundamentally overvalued. Against such a backdrop, some relief is therefore ex-pected at the margin for the ZMW.
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