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Roundup: On the Rocks?

Oil & metals slip back. The key global development this week has been the dip in commodity prices with oil down by around 7% on the week and Brent crude flirting with $47. So far, the betting is on the dip being driven by a pickup in supplies rather than softer global demand. However, sentiment was not helped by this week's Chinese PMIs signalling a slowdown in April activity and we can expect prices to be particularly sensitive to global demand-side indicators over the next few sessions (including Monday's release of Chinese April import and export figures).

There was some contagion across the industrial commodity complex, including iron ore (-10%) and copper (-3%). while gold (-4%), silver (-6%), platinum (-3%) and palladium (-1.5%) also lost ground. Agriculturals were mixed with rises for palm oil (+3%), rice (5%) and cocoa (1%) but declines for sugar (-5%) and coffee (-1%).

PMIs diverge. Nigeria's April PMIs generally affirmed the expected recovery in activity, particularly in manufacturing which saw a rise from 47,.7 in March to 51.1 in April. However, the South African PMIs slipped back.

Tunisian Dinar responds. Last week saw the Dinar rise by around 3% against the USD in response to the 50bps point hike in the policy rate at the end of April. Mozambique's Metical also gained solidly (3.3%) after the opposition Renamo extended its ceasefire indefinitely.

The week ahead will be largely dominated by scheduled April inflation figures (Tunisia, Tanzania, Mauritius, Egypt, Rwanda, Ghana, Senegal, Egypt, Mozambique, Sao Tome and Principe, Seychelles, Namibia, Cote d'Ivoire and Angola), South African unemployment, manufacturing and mining output and Mozambican business confidence.

More than Macron. With little in the way of Eurozone economic and the expected election of Emmanuel Macron as the next French President virtually assured, the euro look set for a quiet week. In the UK we have the Bank of England policy decision (no change) and updated economic forecasts where the emphasis is likely to be on the significance of recent signs of a slowdown. In the US, the latest FOMC minutes and solid April nonfarm payrolls print have boosted the likelihood of a rate hike in June. Next week's April retail sales and CPI inflation are unlikely to alter the prevailing sentiment. The week could kick off on a dampener if Chinese external trade data suggests that domestic growth may be slowing.

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