SHANGHAI, Aug. 11 (SMM) – Few releases of headline economic indicators are scheduled for this week. The aftereffects of last week’s releases and the US dollar testing the heights of its current strength should allow base metal prices to level out and then gain ground later in the week.
Analysis of Major Macro-economic News in China, US, EU and Russia
HSBC’s July PMI hit 52, its highest since January, 2013. Following its July 23 session, the Standing Committee of the State Council announced measures to reduce the cost of financing for China’s businesses, following up on a series of small stimulus measures in H1. This, combined with reforms to China’s economic structure slated for H2, should counteract downward pressures and revive growth.
US, EU and Russia
Russia imposed a “full embargo” of most food imports from the EU, the US, and other countries that have imposed sanctions against it August 7. The Russian embargo took immediate effect and will remain in place for a year. The US announced sanctions penalizing Russia’s finance, energy and defense sectors July 17 in response to Russian intransigence and continued support for separatists in eastern Ukraine. The EU agreed to even harsher sanctions July 29 after the downing of Malaysian Airlines’ MH17. Russia’s embargo covers more products than either economists or Russian retailers had expected and is likely to push up inflation in the country. Russia imports 40% of its food with its beef, pork, poultry, sugar, carrot, onion, dairy, and potato demand far outpacing domestic output. The Russian move will have far less impact on the US economy than on that of the EU, which relies on Russian energy and cashes in on Russia’s strong demand for agricultural products. The EU is weighing the cost of additional sanctions against Russia’s finance sector against costs to its own.