The metal markets were hoping that Government support measures would push the floundering global economy on to a more even keel. This was already producing one or two modest gains.
The meeting of the G20 (19 of the world’s more important economies plus the EU) in Mexico talked of countries without too much debt stimulating their economies. But there was also much discreet finger-pointing as to who was to blame for the problems, despite an overall effort to pull together.
The crisis in the eurozone was, of course, a prime candidate for outsiders. The Greek election has made possible a potentially viable coalition government, but that is still well short of resolving the crisis.
Spain and Cyprus saw their sovereign ratings cut by Moody’s, the former by three notches to Baa3 and the latter by two notches to Ba3. Equally, the yields on bond issued by Spain and Italy continue to rise to levels that threaten the countries’ viability.
The EU has taken some steps towards a more integrated banking system, and perhaps some sort of monetary union. But it is still not clear whether this will happen quickly enough to stop the eurozone from imploding.
The economic news is not much better elsewhere. In the US, industrial production dropped by 0.1% in May, having grown by 1% a month earlier, and manufacturing was down by 0.4% in May. At the same time, capacity utilisation declined by 0.2% to 79% in May. Also in the US, the number of initial jobless claims increased to 386,000 in the week ending 9 June, a rise of 6,000 from the revised total of the previous week.
Meanwhile, Standard Bank has been looking at China’s electricity production as an indicator of economic activity. It noted that this year started poorly, although things improved in February and March, with respective year-on-year increases of 19% and 7%. More recent figures for power output in May and June have been up by 1.5% and 3.2%, respectively. Thus, the Chinese economy had not gained momentum until the end of May and was slowing, the bank concluded.
Even Japan’s industrial output was down by 0.2% month-on-month in April, according to revised official data. This compared with an initial figure of a 0.2% rise and a 1.3% rise in March.