Macro Roundup (Jun 1)

SHANGHAI, Jun 1 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected in the day ahead.

US President Donald Trump said during a much-awaited news conference Friday that he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the US would pull out of the phase one trade agreement reached with China earlier this year, easing trader concerns for the time being and helping the S&P 500 erase earlier losses to end the day slightly higher.

The announcement came after China had approved a national security bill that would increase the mainland’s power over the city. Tensions between Washington and Beijing have risen lately, with trade, the coronavirus pandemic and now Hong Kong a focus in the dispute.

The US dollar extended its slide against a basket of rivals on Friday, slipping to the lowest in one and a half months before recovering some ground, due to month-end flows and investors continued to cheer the European Union’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion-euro ($828 billion) recovery fund and global economies gradually moving to reopen after coronavirus-linked shutdowns.

Oil jumped more than 5% on Friday, the last trading day of the month, capping off its best month in history as an uptick in demand as well as record supply cuts pushed prices higher. West Texas Intermediate, the US oil benchmark, finished May with a gain of 88%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%.

Baker Hughes reported Friday that the number of active US rigs drilling for oil declined by 15 to 222 in the week ended May 29. The oil-rig count has now fallen for 11 weeks in a row, suggesting further declines in domestic crude output. The total active US rig count, meanwhile, also fell by 17 to 301, according to Baker Hughes.

LME nonferrous metals, except for tin, closed higher on Friday, with zinc advancing 2.4% to lead the way up. Lead jumped 1.5%, nickel rose 1.2%, aluminium climbed 0.6% and copper gained 0.2%.

SHFE nonferrous metals performed similarly on Friday night. Zinc surged 1.8%, lead rose close to 1%, copper crept up 0.8%, nickel advanced 0.7%, aluminium gained 0.5%, while tin edged down 0.02%.

Data published over the weekend showed that China’s factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened.

The official manufacturing Purchasing Manager's Index (PMI) eased to 50.6 in May from 50.8 in April, China’s National Bureau of Statistics data showed on Sunday, but held above the 50-point mark that separates expansion from contraction on a monthly basis. Analysts had expected a PMI reading of 51.

The official non-manufacturing PMI rose to 53.6 in May, from 53.2 in April, suggesting the sector's business and consumer confidence may slowly be improving.

Looking ahead to Monday, a private survey of China’s manufacturing activity is expected to be released at 9:45 a.m. Beijing time, when the Caixin/Markit manufacturing PMI is set to be out.

The Markit manufacturing PMIs for Germany, the eurozone and the US for the month of May are also slated for release on Monday.

US consumer sentiment rose to a final May reading of 72.3 from a final April level of 71.8, according to reports on the University of Michigan gauge released Friday.

The euroarea’s consumer inflation continued to slow on crashing oil prices in May, but underlying price growth held steady. The consumer price index came in at 0.1% on an annual basis, but core reading was much more robust, at 0.9%.