SHANGHAI, Aug. 1 (SMM) – Metal market remained cautious since July 31, awaiting the decisions of the Fed and ECB, with rallies in the market cooling down after China’s manufacturing data missed forecasts. Most market players turned to watch on the sidelines.

On August 1 morning, China’s manufacturing PMI for was reported down 0.1 percentage point MoM to 50.1%, an 8-month low. The output sub-index for July stood at 51.8%, down 0.2 percentage point from June, the lowest point since December 2011. The sub-index for new orders continued to trend below the boom-bust line for three consecutive months by dipping 0.2 percentage point from June to 49%. The data suggested that the demand in China's manufacturing sector is declining. Meanwhile, the central government stressed to remain the stabilizing growth a top priority against the complicated international situations and increasing difficulties confronting domestic economic development at the meeting of the Political Bureau of the Communist Party of China Central Committee July 31. Market thus expects more stimulus measures will be introduced by China’s central bank.

In Europe and the US, the policy meeting of the two central banks and manufacturing data are much concerned. The US consumer confidence index for July was 65.9, much higher than expected 61.5, while Chicago PMI was 53.7, beating the expected 52.5 and June’s 52.9. These all reflect the weakness in US economy during 2Q moderated. As such, most investors predict the Fed may not implement another round of QE policy in near term, but they still pay close attention to the meeting statement so as to find out the highlights of the Fed. Market expects the Fed will not likely take actions before September.

The situation in Europe allows no optimism. Data released by Eurostat Tuesday indicated that unemployment rate in euro zone peaked 11.2% in June, the highest level since 1995, with unemployment rate in Spain hitting as high as 24.8%. Market remained focused on moves of the ECB, and expected the ECB would adopt additional stimulus measures at the policy meeting August 2.

Base metals staged rebounds after the ECB chairman Draghi promised to do whatever to save the euro. However, market turned cautious since policy decision will be released by the two central banks. Many investors believe the rebound will be limited given the depression in several countries in the euro zone.