Commentary: Weak China data drives down commodities
Over the weekend, China released a number of disappointing key economic figures that have knocked down several markets to start the week. In addition to major indices across the Asia Pacific region, commodities have been hit hard as traders readjust expectations for resource demand downward.
Copper is dropping sharply for a second day in a row. Crude oil is also falling with WTI outpacing its peers to the downside as Brent and gasoline get a bit of a cushion from an increased political risk premium ahead of this weekend’s referendum in Crimea. In precious metals, platinum which is more sensitive to industrial demand, is falling off while gold and silver remain relatively flat.
European indices have rebounded a bit today on mixed industrial production numbers. US indices having finished mixed on Friday appear to be heading for a slightly lower open as traders continue to mull the impact of better than expected nonfarm payroll numbers on tapering (there’s no reason to stop now).
Currency markets are relatively quiet to start the week. AUD continues to slide following efforts last week by RBA Governor Stevens to talk the Dollar down. GBP has also been softening to start the week. CAD appears to be stabilizing from Friday’s big selloff. JPY may get more active as the day progresses with a Bank of Japan meeting scheduled for tonight.
McDonalds reported global same store sales were down 0.3% over year last month. This actually can
be seen as a potentially positive indicator for the global economy Just as more people tend to eat at
McDonalds in recessions, the same people may elect to eat at more expensive restaurants when they
have more money or feel more secure about the economy.
Economic reports released overnight and this morning include:
Canada housing starts 192K vs street 190K
China trade balance ($22.9B) vs street $14.5B
China exports (18.1%) vs street 10.6%
China imports 10.1% vs street 7.6%
China new yuan loans 644B vs street 721B
China consumer prices 2.0% vs street 2.1% vs previous 2.5%
China producer prices (2.0%) vs street (1.9%)
Japan GDP annualized 0.7% vs street 0.9%
France industrial production (0.1%) vs street 1.3%
France manufacturing production 1.4% as expected
Spain industrial production 1.1% vs street 1.8%
Italy industrial production 1.4% vs street 0.3%
Greece consumer prices (0.9%) vs street (1.4%)
Economic reports due later today include:
There are no major announcements scheduled for North America later today.