After inching into new high ground for the year on Monday, the ASX 200 has lacked the momentum to break clearly through resistance. Markets are looking for a catalyst to trigger a change in investor outlook to reignite the uptrend.
While metals prices were firm overnight, China’s manufacturing PMI’s have not helped the outlook for mining stocks. Both the official and Caixin manufacturing PMI’s eased in April. Manufacturing employment declined while cost pressures eased and growth in output and new orders slowed. This overall weakening in trend growth in China’s manufacturing sector may be staring to reflect the impact of the wind back in government economic stimulus.
Tonight’s release of US oil production and inventory data looms as a key event for oil markets with prices approach the support of the March lows. Markets need to see significant reductions in oil inventories this summer to provide visibility on the potential for OPEC’s production cuts to eventually achieve their aim of a gradual move towards a balanced oil market.