The IMF on Monday downgraded its forecast for global economic growth in 2020 to 3.3%, down from its previous estimate of 3.4% in October 2019. The group also lowered its outlook for growth in 2021 by 0.2 percentage points to 3.4%.
“Importantly though, growth is still forecast to be stronger than the 2.9% recorded in 2019 with risks less skewed to the downside given preliminary signs the slump in manufacturing and global trade is starting to bottom,” Tapas Strickland, director of economics and markets at National Australia Bank, said on Tuesday.
At the same time, liquidity remains low while participants continue to exit the market ahead of the upcoming Chinese New Year holidays (January 24-30).
“Shanghai continues to empty, many street-side shops are now closed, although those in the biggest malls will remain open. Consequently, in the financial markets, which will close on Thursday afternoon for a week, liquidity is fast disappearing, which as you are well-aware can lead to torpor or occasionally the profitably unexpected,” John Browning, managing director of China-focused brokerage BANDS Financial, said in a morning note.
In the base metals, lead has reversed the strong gains made on Monday
and was this morning’s worst performer. The most-traded March lead contract dropped to 15,185 yuan ($2,212) per tonne at the close of morning trading, down by 285 yuan per tonne or 1.8% from Monday’s close of 15,470 yuan per tonne.
Elsewhere, March copper slid by 1.3% to 48,480 yuan per tonne, March aluminium dropped by 0.4% to 14,155 yuan per tonne, March zinc declined by 1.1% to 18,210 yuan per tonne and April nickel fell by 0.2% to 107,830 yuan per tonne.
Bucking the weaker tone this morning, June tin managed to eke out a gain of 0.1% to 140,110 yuan per tonne.
- The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was down by 0.004% at 97.59 as at 11.30am Shanghai time.
- The Shanghai Composite Index was down by 1.04% at 3,063.56 as at 11.30 am Shanghai time.
- In data on Monday, Germany’s producer price index (PPI) on a month on month basis for the December-January period improved by 0.1%.
- In data today, employment figures out of the United Kingdom, Germany-based think tank Zew’s reading of economic optimism in the European Union and Germany as well as Economic and Financial Affairs Council meetings are scheduled.