Weaker than expected manufacturing activity in the US and China has investors cautious ahead of PMI reads in Europe this week. In a world of competitive currency devaluation, importing manufacturing demand is a challenge, and the numbers so far indicate there is only so much global demand to go around. Industrial metals were hit hard, with Comex copper trading through the bottom of its recent trading ranges. Lead, aluminium and zinc all fell, and gold and silver remained steady. Oil, however, bucked the trend, holding higher ground. Energy replacement may be a factor in the rise of both sugar and corn, although agricultural commodities generally headed higher. Share markets in the US fell overnight as the ISM manufacturers index showed the US expansion slowing. Although prices fell, and construction spending rose more than expected, investors were less than impressed. Selling spread across all sectors, and the blue chip US 30 index outperformed its broader based peers the US S&P 500 and the Nasdaq. Stocks in Asia also felt pressure, although trading was subdued. The Nikkei index fell almost 1%, despite a flagged “bold” stimulus package from the Bank of Japan later this week. Yen trading also defied the possibilities, gaining ground against the USD and EUR. Risk currencies AUD, NZD and CAD, are also firmer, despite weaker shares and metals. Markets interpreted comments from EU President Van Rompuy as a sign that European politicians are now singing from the same sheet. Cyprus is “not a template” removing the threat of a potential run on European banks. Rompuy went further, labelling the initial attempt to levy all deposit holders as an “unfortunate decision”. These comments could see European markets maintain a firm tone today. Futures markets point to opening gains for Germany and the EuroStoxx 50, and modest falls in the UK and France. Global miners are in the spotlight. Glencore has again extended the date to finalise its merger with Xstrata, pushing back to May 2. BHP Billiton informed Australian authorities its plan to build t6he world’s largest floating LNG platform in conjunction with Exxon Mobil, and Rio’s attempts to gain a power concession for its NZ smelting operations were rejected.
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