The metal markets are hoping to see more quantitative easing from the US, and possibly some sort of stimulus from China,
so prices have firmed up a little. There is an old market adage: “buy on the rumour, sell on the news” (provided, of course, that the rumour has bullish implications). Like old wives’ tales, such adages contain some truth some of the time.
The economic news continued to be poor. The International Monetary Fund (IMF), for example, trimmed its forecasts for global growth by 0.1% for this year and by 0.2% for next year, to 3.5% and 3.9% respectively.
For the US, the growth forecasts for this year and next have both been cut by 0.1%, to 2% and 2.3%. For the eurozone, the outlook for this year is an unchanged contraction of 0.3%, with growth of 0.7% for next year, reduced by 0.2% from the previous forecast. And for China, it is growth of 8% and of 8.5%, respectively 0.2% and 0.3% less than previously expected.
US retail sales fell by 0.5% between May and June, according to the country’s Commerce Department.
China’s industrial production grew by 9.5% year-on-year in June, according to the National Bureau of Statistics. This was slightly slower than the 9.6% seen in May and below the markets’ expectation of 9.8% growth in June.
The country’s gross domestic product grew by 7.6% year-on-year in the second quarter of this year; this was below the hopes of a 7.7% increase and down by 8.1% from the first quarter. It was also the lowest growth rate seen since the start of the global financial difficulties in 2009.
Chinese prime minister Wen Jiabao warned that the country’s economy had still to find growth momentum, while the country’s National Development and Reform Commission warned that the economy could continue slowing down in the third quarter of this year and beyond.
The eurozone’s troubles have also continued to worry the markets. In the comments accompanying its forecasts,the IMF called on European leaders to push for more fiscal and banking integration - and especially to set up a pan-European bank deposit insurance scheme, a mechanism to “resolve” failing banks - and for the European Central Bank to supply ample liquidity. But such measures continue to be very difficult politically.