Stock markets look amazingly strong, given the uncertain political environment of the Trump presidency, populism in Europe and mounting tension over Brexit, an escalating North Korea crisis, and global jihadist terrorism.
China’s official manufacturing PMI registered 51.2 in May, above market expectations of 51.0, the same level as in April. Based on today’s PMI data, we expect industrial production to grow by 6.8% yoy in May, compared with 6.5% in April. The non-manufacturing PMI rose to 54.5 in May, from 54.0 in April. We maintain our call that China’s GDP growth will remain steady in the run to the party congress at the end of this year.
Renegotiating NAFTA’s ‘rules of origin’ could hit many economies outside of NAFTA. Manufacturers, particularly of cars and car parts, in Japan and the smaller European and Asian economies, face larger risks. Australia will be largely unaffected by the renegotiation of NAFTA’s ‘rules of origin’ reflecting limited trade with NAFTA.
cannot stress strongly enough the importance of understanding where the markets are currently technically located, with regards to different time frames and which help to guide all my trading and investing decisions.
WHEAT General Comments: Wheat closed lower in all three markets on ideas of improving crop conditions. USDA showed that Winter Wheat condition remains lower than a year ago and was lower than last week.
The extent of the setback from hail, frost and heavy rains to US spring crops was underlined by data showing that corn had made a worse-than-expected start, with spring wheat ratings among the weakest since the mid-1990s.
The Johnson Redbook Retail Sales Index was up 1.8% in the fourth and final week of May following a 2.0% gain in the prior week. Month-to-date, May was up 1.9% compared to May of last year (relative to a target of 2.1%).
Cocoa futures soared 6% on a wave of short-covering fuelled by talk that Cote d'Ivoire had sold forward the equivalent of some 20% of world production, besides reports of poor weather for the country's mid-crop harvest.
Hopes grew of a slowdown in the selling which has driven soybean and soymeal futures to 14-month lows, after regulatory data showed hedge funds had already taken out a bigger-than-expected amount of short bets.
COTTON General Comments: Cotton was lower in quiet trading. The charts show July remains in the previous trading range. Trends are down, but futures are finding support at current price levels, perhaps from mill price fixing and two sided speculative trading.