Macro Roundup (Jul 2)

SHANGHAI, Jul 2 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar slipped on Wednesday in choppy trading, with the market having a modest appetite for risk-taking amid generally upbeat US data and improving European economic numbers.

The dollar index, which tracks the greenback against basket of its peers, touched a one-week low of 97.025 before closing at 97.153.

Improved market sentiment also gave a boost to Wall Street on Wednesday, with the S&P 500 and Nasdaq Composite starting the new quarter with solid gains.

Oil prices rose about 1% on Wednesday following a drawdown in US crude inventories from record highs and a string of positive manufacturing data, but lingering concerns over the COVID-19 pandemic tempered gains.

US crude inventories fell more than expected, dropping by 7.2 million barrels last week, after hitting all-time highs for three consecutive weeks, the Energy Information Administration (EIA) data showed. Analysts had expected a 710,000-barrel drop.

LME base metals, except for tin and lead, closed higher on Wednesday, though their gains were no more than half a percent. Zinc rose nearly 0.5% to lead the gains, nickel climbed 0.4%, aluminium and copper inched up about 0.3%, while tin and lead dipped about 0.1%.

The changes to the nonferrous complex on the SHFE were also moderate in overnight trading. Nickel advanced nearly 0.6% to be the biggest gainer, lead rose 0.4%, aluminium climbed 0.3% and copper edged up 0.2%, while zinc and tin fell 0.3%.

On the coronavirus front, there were positive news overnight around the development of a potential vaccine, which helped lift market sentiment. A study of a coronavirus vaccine candidate being developed by Pfizer and BioNTech showed the drug created neutralizing antibodies. The results were released online, but have not been reviewed by a medical journal yet.

A string of upbeat economic data was the main driver of market sentiment on Wednesday.

Results of a private survey released on Wednesday showed China’s manufacturing activity expanded and beat expectations in June, hitting its highest level since December 2019. The Caixin/Markit manufacturing Purchasing Manager’s Index (PMI) came in at 51.2 in June, above expectations of a reading of 50.5. PMI readings above the 50-level signify expansion on a monthly basis, while those below that figure represent contraction.

“The manufacturing sector continued to expand, as most of the country had the epidemic under control and the economy continued to recover,” said Wang Zhe, senior economist at Caixin Insight Group in a press release.

While overall manufacturing demand recovered at a fast clip, overseas demand remained a drag, Wang wrote. “New export orders continued to fall amid weak external demand, as the epidemic situation overseas remained uncertain in many places and the number of new daily infections remained high,” he said.

The Institute for Supply Management said US manufacturing activity grew to its highest level since April 2019, recovering from a sharp contraction in May, while ADP and Moody’s Analytics said US private payrolls jumped by 2.37 million in June and payrolls for May were also revised to a gain of more than 3 million from a loss of 2.76 million.

In Europe, Germany’s manufacturing sector contracted at a slower pace in June, while French factory activity rebounded into growth.

Figures from Germany’s Federal Labour Office showed the country’s jobless total rising by 69,000 in June, slowing from the 237,000 recorded in May.

The closely-watched monthly US nonfarm payroll report is set to be released Thursday at 8:30 a.m. ET. Meanwhile, the weekly jobless claims data will also be released Thursday.

Other economic data slated for release Thursday include the eurozone’s unemployment rate for May, US trade account, factory orders and durable goods orders for May.