The China PMI figure is likely to give a boost to the energy and metals complex
The positive China PMI figure gives hope that the country is gradually going over its recent soft patch and sets a bullish daily tone to energy and metal futures.
Energy commodities and metals would be probably trading higher on Thursday thanks to the rapidly expanding manufacturing activity in China. The increase in Chinese business activity comes on the back of an increase in new orders.
US Gold futures have dipped below $1300 per ounce on USD strength. Crude oil meanwhile gained on the basis of the existing geopolitical tensions and the bullish Energy Information Administration (EIA) weekly report.
September Nymex Crude oil ticked up with 0.18 percent to close at $103.22 per barrel, slightly below its session high of $103.33. As the US EIA pointed out in its weekly report, there was a marked reduction in US crude oil inventories, 4.0 million barrels during the week that ended on July 18. That greatly surpassed the expectations for a decline by 2.8 million barrels. For last week, the overall amount of US crude oil inventories was appointed at 371.1 million barrels.
Optimistic Chinese data had its impact on copper trade as well; the US Copper futures with September delivery traded on the upside, to reach $3.23 per pound on Thursday.
The preliminary Purchasing Managers’ Index (PMI) rose to 52 in July, as compared to its last month value, when the final reading amounted to 50.7. That July PMI was the highest observed since the start of last year. It is important to note that the 50 point mark draws the separation line between activity growth and contraction. Economic activity in China has managed to stay in positive territory for a second month in a row. The good figure suggests that the stimulus measures introduced earlier in the country are already feeding through the transmission channels and making their way into the real economy.
