Macro Roundup (Sep 2)

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

The economic activity in the US' manufacturing sector expanded at a stronger pace in August than it did in July with the ISM's Manufacturing Purchasing Managers' Index (PMI) climbing from 54.2 in July to 56. This reading marked the highest print since January 2019 and came in better than the market expectation of 54.5.

The US dollar was at it lowest in more than two years against a basket of currencies, pressured by the US Federal Reserve’s loosening of inflation policy last week.

Gold prices edged up on Tuesday as a weaker dollar countered some pressure from the better-than-expected US manufacturing data, which pulled the metal down from a two-week high.

The US dollar was holding close to a more than two-year low, making gold cheaper for holders of other currencies. US manufacturing activity accelerated to a more than 1-1/2-year high in August, the Institute for Supply Management (ISM) data showed.

Oil prices rose on Tuesday, reversing overnight losses as better-than-expected US manufacturing activity data spurred hope for a post-pandemic economic recovery, and as analysts forecast a sixth weekly drawdown in US crude inventories. In addition, a weak dollar was also supportive for oil as dollar-priced commodities become cheaper for global buyers.

On Wall Street, the Dow Jones Industrial Average gained 215.61 points, or 0.8%, to close at 28,645.66. The S&P 500 climbed 0.8% to 3,526.65 and the Nasdaq Composite advanced 1.4% to 11,939.67. Both the S&P 500 and Nasdaq hit all-time highs.

On the SHFE, nonferrous metals, except for copper and aluminium, closed higher in overnight trading. Zinc added 0.77%, lead advanced 0.41%, nickel firmed 0.2 and tin rose 0.56%, while copper fell 0.65% and aluminium declined 0.93%.

Their counterparts on the LME rose across the board on Tuesday. Tin jumped 2.11% to lead the way up, zinc increased 1.47%, aluminium firmed 1.14%, nickel strengthened 1.44%, copper added 0.13% and lead edged up 0.05%.

In Europe, inflation data for the eurozone came in well below expectations, raising speculation that the European Central Bank will have to act sooner rather than later. Annual headline inflation is expected to come in at -0.2% in August, down from 0.4% in July. Separate figures for the region also zone revealed that the unemployment rate rose once again, to 7.9% for the month of July.

Activity in the eurozone manufacturing sector continued to recover in August from the impact of the Covid-19 pandemic and shutdowns.

IHS Markit’s final manufacturing purchasing managers’ index printed at 51.7, in line with the flash estimate and a touch below July’s reading of 51.8. There were "marked" gains in output and new orders and confidence was at its highest for more than two years, but job losses continued at a strong pace.

Key economic data slated for release today include German retail sales for July, US durable goods orders and factory orders for July, automatic data processing (ADP) employment for August and inventory data from the US Energy Information Administration (EIA).