Commodity markets remain under pressure due in part to the disappointing trajectory of U.S.-China trade negotiations, heightened volatility in the oil sector, and competitive monetary policy easing from major central banks.
In China this morning, Fastmarkets reports “Base metals prices on the Shanghai Futures Exchange were little changed to down during morning trading on Monday August 5, with the complex coming under pressure from heightened US-China trade tensions and stock inflows at the end of last week. Investors have broadly taken a risk-off approach to trading this morning, awaiting a potential retaliatory response from China.” While Reuters reported over the weekend that “Saudi energy minister Khalid Al-Falih discussed oil markets with his Russian counterpart and stressed that Saudi Arabia would continue to comply with production cuts until the end of Q1 2020,” continued seizures of oil tankers in the Gulf has only added to market uncertainty. Last week, NYMEX crude oil futures traded as low as $53.39 per barrel while COMEX copper futures plunged to $2.56 per pound. This morning, the Institute for Supply Management will release its U.S. non-manufacturing index for July, and as the WSJ reports: “Activity in the U.S. services sector pulled back in June, suggesting the economy is reverting to a slower but steady pace of growth after a strong 2018. Economists surveyed by The Wall Street Journal expect the nonmanufacturing index logged in at 55.7 in July, up slightly from June.” In foreign exchange trading, the British pound traded as low as $1.2079 last week and continued to struggle early on this morning.