US Pre-Market: PMIs Offer Short-Term Relief

Huge Cloud of Uncertainty Remains

A mixed start to trading at the start of the week as attention shifts back to how economies are coping with the economic reopening.

It’s PMI week which means we get an onslaught of economic survey’s from around the world, starting with the manufacturing sector today, and so far the releases have looked quite promising. Back in growth territory and surpassing expectations, just what we want to see as businesses try to contend with a new and uncertain future.

Of course, these survey’s can be volatile at the best of times and this is far from that. The risk of further restrictions and lockdowns will continue to be a huge cloud of uncertainty for many industries but after months of disruption, there may be a sense of relief at this data. Whether fears become a reality will depend on how good localized containment efforts turn out to be.

HSBC slips on higher loan provisions

The impact of the pandemic has been extremely evident in bank earnings in recent weeks and HSBC this morning became the latest to make additional huge loan provisions. Weaker profits and provisions of between $8-13 billion sent shares down more than 5% and forced the bank to accelerate its turnaround plans.

Oil remains in consolidation mode

Oil prices are down around 1% on Monday, with WTI dropping below $40 after testing the level from above in recent days. The rebound we’ve seen in the dollar over the last couple of sessions is likely weighing on oil prices which have, broadly speaking, been peaking around the $40 mark for a couple of months. As long as we remain in the $38-42 range in WTI, there’s no reason to think we’re out of the consolidation period for crude.

Gold takes another run at $2,000

The dollar bounce has certainly taken the edge off gold, although not before it took another run at $2,000 early in the session. This feels like a very natural place for gold to be experiencing some profit taking after hitting a new record high last week but there’s nothing to suggest we’re going to see a larger pull-back at this stage. If the dollar continues to experience downside pressure, it may just be a matter of time before $2,000 comes under considerable pressure.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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