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But the same was not true in Japan, where the final manufacturing PMI was confirmed to have fallen to 44.8 in March, from 47.8 in February. With PMI data out across Europe and the United States later today, initial US jobless claims out on Thursday and the US employment report out on Friday, the markets are going to need to be braced for some bad news.
Base metals Three-month base metals prices on the London Metal Exchange were mainly weaker this morning, the exceptions were aluminium and tin that were up by 0.1% and 0.3% at $1,527.50 per tonne and $14,575 per tonne respectively. The rest of the complex was down by an average of 1.1%, with copper leading the weakness with a 1.3% drop to $54,868 per tonne.
Volume on the LME was at a pre-crisis normal level with 5,446 lots traded as at 5.47am London time, this compares with an average last week of around 11,000 lots at a similar time of day.
The most-traded base metals contracts on the Shanghai Futures Exchange were mixed; May aluminum and lead were lower by 0.2% and 0.3% respectively, while the rest were firmer. June tin led on the upside with a 2.3% gain, while May zinc and copper were up by 0.3% and 0.4% respectively, with the latter at 39,460 yuan ($5,564) per tonne, and June nickel was little changed.
Precious metals Spot gold prices are consolidating after Tuesday’s $42-per-oz decline – prices were recently quoted at $1,585.92 per oz. Silver was recently quoted at $14.07 per oz, while the platinum group metals were holding up well as they continue to consolidate.
Wider markets The yield on benchmark US 10-year treasuries has eased further and was recently quoted at 0.62%, compared with 0.67% at a similar time on Tuesday.
Asian-Pacific equities were mixed this morning: the Hang Seng (-1.22%), the Nikkei (-2.44%) the Kospi (-1.78%), the CSI 300 (+0.66%), and the ASX 200 (+3.53%).
Currencies The dollar index is consolidating and was recently quoted at 99.04, this after falling from 103 to 98.20 last week.
Most of the other major currencies we follow are also consolidating: the euro (1.1027), the Australian dollar (0.6119) and sterling (1.2382), while the yen (107.50) is strengthening.
Key data Wednesday’s data will focus on the final PMI readings and the various unemployment reports that are out the European Union and the US. In addition, there is data on Germany retail sales.
In the US, there is also data on construction spending, Institute for Supply Management manufacturing prices, total vehicle sales and crude oil inventories.
Today’s key themes and views With China’s economy starting to come out of the Covid-19 tunnel, with Europe and the US in the tunnel and other countries still entering the tunnel, there are going to be a lot of cross currents with some things getting better while other continue to deteriorate.
What does seem to be dawning on the market is that while in “normal” downturns producers are slow to cut production, this time with the Covid-19 virus calling the tune, and aided by weak prices, the supply response has been much quicker and could overshoot with more production being cut than is required to balance the market.
With production being cut, China starting to recover and with it being a net importer of metal concentrates and refined metal, there may well be regional dislocations between demand and supply that could support prices and premiums.
While the crisis unfolds we expect there will be more demand for haven assets, especially because all the fiscal stimulus in this ultra-loose monetary climate, combined with the surge of debt could erode the value of other asset classes.