PMIs paint a bleak picture for manufacturing but China offers hope
|Manufacturing PMIs released throughout the day have made for pretty miserable reading and even those in China barely registered any growth after a lengthy period of contraction.
The Chinese data did offer some cause for hope at least, despite ultimately barely sitting in growth territory. The trajectory is positive and boosted by targeted stimulus measures that are seemingly working. External demand remains a problem but a bump in domestic demand is promising.
The sector in Europe is looking particularly grim with demand remaining extremely weak, backlogs falling and layoffs expected to accelerate over the months ahead. That's unless we can see a rebound in activity which is looking very unlikely at this stage with the global economy struggling for any positive momentum against the backdrop of high interest rates.
The PMIs from the US were a little better, particularly the ISM reading which significantly beat expectations but even here, it remains below 50 and therefore in contraction territory. With interest rates set to remain "higher for longer", things aren't likely to dramatically improve for the sector.
Volatile start for oil ahead of OPEC+ meeting
It's been a volatile start to the week for oil, with prices initially rising before falling negative to trade almost 2% lower on the day. We've had a vast selection of PMIs to bear in mind today, as well as speculation around the OPEC+ decision on Wednesday and, of course, the US averted a government shutdown.
I'm not sure all of this is a net negative for oil, per se, but it was trading at very high levels prior to this and had already started to lose momentum so perhaps what we're seeing is a case of profit-taking. Especially given the proximity to the OPEC+ meeting on Wednesday.
Higher yields hammering Gold prices
Gold is getting hammered by higher bond yields, with the yellow metal slipping another 1% today, weighed down by a stronger dollar. The next major area of support for gold is around $1,800 but if yields keep rising, that may not put up much of a fight. Of course, there's no guarantee we will keep seeing yields rising but there's no doubt the recent trend in gold has been extremely bearish and aggressive.
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