Global market shares declined last week in line with concerns that the effects of the US-China trade war have been reflected on the US economy as the US ISM manufacturing index declined to the lowest level in more than a decade.
In the US, the ISM manufacturing index dropped to 47.8 on Tuesday, the lowest since June 2009 (expectation 50.1). In the index, below 50 points to contraction and above levels indicate growth. If growth slows down in the US economy, one of the few positive factors that support the global economy will disappear. The slowdown in the US will also follow the indications that the European economy is about to enter a recession.
Due to the closed Chinese markets, trading volumes of base metals remained low throughout the week (National Day holiday 01-07 October). Following the release of the LME copper ISM index, it fell to its lowest level since Tuesday 3 September ($ 5518). LME copper, which has recovered slightly from purchases at low levels, has reinstated its gains as US announcements of new customs duties to the EU have raised concerns about global economic growth and demand for industrial metals. The LME copper closed the week at $ 5673 with a loss of $ 90.
The belief that the economic worsening of the US trade wars with China and now the EU continues to emerge as the situation that reduces the risk appetite in the market. The United States has announced that it imposes new customs duties on EU aircraft and various products. EU manufacturers were already facing US threats to impose customs duties on steel and aluminum, and Trump’s duty to impose customs duties on EU-produced cars and auto parts.
Due to bad data, the Fed’s October 25th Fed rate cut rate increased to 85%, according to Fed futures. The dollar index reversed the data on Tuesday, after reaching the highest level of 2.5 years with 99.667 ahead of the data. The dollar index closed the week with a 0.3% loss as concerns over the US economy were likely to enter recession. The euro, on the other hand, was repressed with concerns about the recession of Germany, but the premium was closed due to the depreciation of the dollar.
Although Friday’s September employment growth was announced as 114K below the expectations of 130K, the fact that the previous data was revised from 96K to 1225 prevented the data from remaining under expectations. The unemployment rate was announced as 3.5%, below the expectations of 3.7%. This was the lowest unemployment rate in the last 50 years. The hourly wage data was expected to increase by 0.2% on a monthly basis, but remained unchanged. Although the increase in employment points to the strength of the economy, the absence of an increase in the wage data did not change the expectation that the FED will cut interest rates in the market and strong indices came to the US indices on Friday. However, indices closed the week minus due to the hard sales at the beginning of the week.
The US-China trade talks, which will take place on October 10-11, will create a negative atmosphere in the market. 3 major US indices closed the day with losses of around 0.4%.
European markets continued to recover yesterday following US employment data on Friday. On the day of economic data, Germany’s factory orders came to the fore. Despite the expectation of a decline of 0.3% in August, factory orders, which fell 0.6%, did not prevent the recovery in the indices.
The dollar rose yesterday amid strong risk aversion and weak solution expectations in global trade talks. The dollar index, which tested the 99.005 level during the day, is now flat after closing the day at 0.16%.
After a week of holiday, the re-opened Chinese indices this morning saw premium, purchases throughout Asia dominated. However, investors were cautious when Trump said it was unlikely that a quick deal on US-China trade negotiations would be possible.
LME copper closed the day with a 0.6% premium yesterday, hoping for a resumption of Sino-US talks this week. For the first time since September 30, LME copper has closed above the $ 5700 level. Contango rose due to the abundant supply. The contango between the 3-month copper price of Cash is the highest since August 2018, with 36.9 this morning. LME copper has fallen by 2.77% since the beginning of the year due to weak demand despite major supply cuts.
With the return of Chinese investors, the transaction volume increased, while the LME copper rose to $ 5758 in the Asian session this morning, but declined to $ 5682 after the news that the United States also included China’s artificial intelligence companies.