Commodity markets experience mixed trajectory as recession fears drop
Date
8/20/2024 9:02:10 AM
(MENAFN) Last week, commodity markets experienced a mixed trajectory, influenced by varied developments across different sectors. Precious and base metals saw an uptick, while other commodity groups faced declines amid ongoing concerns about the Chinese economy. The fluctuations were also shaped by easing recession worries in the US.
In the US, the Consumer Price Index (CPI) for July rose by 0.2 percent month-on-month, aligning with expectations, and increased by 2.9 percent on an annual basis. This marked a slowdown in annual inflation for the fourth consecutive month, reaching its lowest point since March 2021. The continued deceleration in inflation is moving towards the Federal Reserve’s target of 2 percent, enabling the central bank to prioritize its goal of maximizing employment. Additionally, US retail sales increased by 1 percent month-on-month in July, surpassing forecasts.
In response to these economic indicators, market expectations suggest a higher likelihood of the Federal Reserve implementing a 50 basis point interest rate cut in September. There is also significant speculation about a potential total reduction of 100 basis points by the end of the year, as the central bank navigates its dual mandate of price stability and employment.
On the other hand, the Producer Price Index (PPI) in the US rose by 0.1 percent month-on-month and 2.2 percent annually in July, falling short of expectations. In contrast, China's industrial production growth fell below projections with an annual increase of 5.1 percent, and the unemployment rate remained above expectations at 5.2 percent. Despite these challenges, Chinese retail sales exceeded forecasts, climbing 2.7 percent, which suggests signs of economic recovery and mitigates some of the previous recession concerns.
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