Commodities: Targeted easing by China too mild, Morgan Stanley says
Industrial metals moved lower on Thursday, dragged down by some slightly mixed economic data Stateside and some rather poor analyst comment as regards the outlook for the Chinese economy.
Industrial metals moved lower on Thursday, dragged down by some slightly mixed economic data Stateside and some rather poor analyst comment as regards the outlook for the Chinese economy.
In that regard, economists at Morgan Stanley wrote to clients explaining that “the risk [is that the current targeted easing measures are] too mild at a time when the property slowdown has strengthened growth headwinds".
"In our view, the policy trajectory in 2013 is not a good example to follow for 2014 due to a different turnout in the property market."
Nevertheless, while the headline drop in US durable goods orders might have been rather startling, at -18.2% month-on-month, excluding transportation they increased at a 0.7% month-on-month clip in August (consensus: 0.5%), while revisions pared the previous month's fall to -0.5% instead of -0.8%.
Three-month copper futures fell 0.70% to $6,695 per metric tonne out on the LME. Aluminum, tin, nickel, lead and zinc were all lower in London trading.
A stronger US dollar index – which was at over four-year highs - also likely impacted trading.
Gold however was spared, ending the day up 0.16% to $1,223.80 per ounce, on geopolitical concerns, as Russia moved to block Ukraine’s integration with the European Union.
Front month West Texas crude futures also edged higher, by 0.04% to end the day at $92.57 per barrel on the NYMEX.
Agricultural futures were also mostly down following the latest forecasts from the International Grains Council (IGC).
The IGC now sees worldwide output of wheat rising to a record 717m metric tons in the 2014-15 season, higher than last month’s forecast of 713m tons and 0.6% bigger than the previous year.
Wheat futures for December delivery slumped 1.3% to $4.74, while corn futures for December delivery fell 1.1% to $3.26 a bushel on the Chicago Board of Trade.