An avalanche of disappointing June economic data from Asia as released by Markit Economics for June has weighed global stocks and commodities offsetting the effects of the Sino US euphoria after the G20 trade war breakthrough earlier this week. China, Japan, Thailand, Malaysia and South Korea all slid into contraction zone reflecting an autopsy of the US-China trade war. Donald Trump and Xi Jinping agreed to restart trade talks which stalled following the slapping of additional tariffs on $250 billion worth of Chinese goods.
Medium term risks subside as long term uncertainty looms
We don’t believe that this move is sustainable enough for the long term as risks of uncertainty are still high. It is vivid that Trump still wants a deal that is skewed towards the US but has continued to use Huwawei as a bet with a commitment to easing his hard stance against them. Trump has threatened tariffs on Europe following aircraft subsidies.
METALS: Base metal markets have priced in a backdrop on global aggregate demand following a dark cloud over Asia affecting metal demand. China on 01 July effected a ban on scrap metal imports that would short supply for the metals. Copper has been suppressed and was in London trading for $5,993 a metric ton below the $6,000 mark. Nickels rally ran out of steam as investors book profits.
CRUDE OIL: Crude shaved 15 cents to $64.9/bbl for ice Brent international benchmark while WTI US futures for delivery in August trimmed 25 cents to $58.89/bbl. on fears of weaker demand from Asia. Crude is expected to be supported by OPEC+ nations decision to extend price cuts in H2.
STOCKS: MSCI index of Asian Pacific shares excluding Japan rose 0.4% as the Shanghai Index rose 1.38% capped by the gloomy global economic outlook. Walls street rallied between 0.35% to 0.88% for its major indexes. The wobbly stock movements suppressed US treasuries further to 2.033% as investors sought safer haven assets in response with golds momentum steadily coming back as the yellow metal traded at $1,033/ounce.
LATER IN THE WEEK: PMI data for African nations on 04 July and US Jobs data report on Friday 05 July.
Compiled my Mutisunge Zulu