SHANGHAI, May 24 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.
Last night
The US dollar index fell after it rose to a five-month high of 94.2 last night. It lost some gains after the US Federal Reserve released its meeting minutes overnight and disclosed that interest rates would not be raised at a faster-than-expected rate.
As support from eased US-Sino trade tension wore off, base metals dipped for the most part with LME copper leading losses and closing 1.8% lower. This marked the largest drop over the last month. Nickel fell 1.4%, zinc and tin dipped while aluminium and lead edged up. SHFE copper fell in line with its LME counterpart and closed over 1% lower. Zinc and nickel lost over 0.6%, aluminium inched down, while lead rose 0.8%, and tin went up slightly.
Germany's Markit purchasing managers' indexes (PMI) for manufacturing, which accounts for about one fifth of the economy, slumped to 56.8 in May, from 58.1 in April, short of forecast. The figure in May registered a record 15-month's low.
"Business activity showed the weakest rise for over a year-and-a-half, and it was a case of slower growth across both the manufacturing and services segments of the economy," said Phil Smith, principal economist at IHS Markit.
"Latest data meanwhile indicated an ill-timed resurgence in cost pressures faced by businesses, linked largely to rising oil prices. The recent cooling of demand has meant increased pressure on margins, with selling price inflation moving in the opposite direction to that of input costs", he added.
The trade dispute with the US and the US' decision to withdraw from the Iran nuclear deal are also affecting the German investor's morale, a ZEW survey showed last week.
The eurozone's Markit preliminary manufacturing PMI fell to a 15-month low of 55.5 in May from April's 56.2. The economy grew at a far slower pace than expected.
PMI services dropped to 53.9, down from 54.7, missed expectations of 54.7 and hit a 16-month low. The composite PMI dropped to 54.1, down from 55.1, and fell to an 18-month low.
"Despite the headline PMI dropping to an 18-month low, the survey remains at a level consistent with the eurozone economy growing at a reasonably solid rate of just over 0.4% in the second quarter," said Chris Williamson, chief business economist at IHS Markit.
The preliminary Markit PMI for the US rose to 56.6 in May from 56.5 in the final April readings, better than the expected 56.5. May's figure hit a record 44-month's high.
"US private sector firms signalled a robust and accelerated rise in business activity during May, which adds to evidence of a sustained growth rebound in the second quarter of 2018," the IHS Markit report said.
April's sales of new, single-family homes in the US fell 1.5% from March, compared to market expectations of a decline of 2%. Data for the first quarter of the year was revised lower, an indication that the housing market struggled to regain momentum.
New housing starts in the US fell for the second time in four months in April, due to sharp declines in the mid-west, north-east, and western US.
The cost of a home loan hit a seven-year peak and accounted for a recent decline in mortgage applications. "Despite rising mortgage rates and higher prices reducing affordability, solid job gains and improving demographics should push both new home sales and housing starts up in 2018 to the highest levels of the expansion," said David Berson, chief economist at British financial institution, Nationwide.
Inventories of US crude oil during the week ended May 18 unexpectedly rose by 5.78 million barrels, according to data from the Energy Information Administration (EIA). Gasoline inventories also increased 1.88 million barrels but inventories of refined oil shrank by 951,000 million barrels.
Day ahead
Kay factors to watch today include Germany’s gross domestic product (GDP) in the first quarter, US weekly unemployment claims, home pricess index in March, and existing home sales in April.
The US dollar is likely to hover at highs while base metals are expected to remain trading rangebound with pressure from a strong US dollar.
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