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Solid gains for European markets today, but some of the indices close near session lows

Still higher on the US/China news but well off highs

The European markets are closed and although major indices are ending with gains, some of the major indices are trading near the lows for the day.
Still higher on the US/China news but well off highs
Below is a chart showing the % highs and low and the closing % for the major indices. The German Dax is up nearly 1% but was up nearly 1.75% at the highs. France’s CAC was up about 1.4% but is closing up 0.52%.
The US stock markets are also trading near intraday low levels now.

Saudi’s Falih: OPEC already agreed on principles of output rollover

Most want 9 months vs 6 month of output cut rollover

The Saudi oil minister Al-Falih is on the wires as OPEC meeting underway today and tomorrow:
  • already agreed on principles of rollover
  • more countries want 9 months than 6 months
  • Saudi July all production seen at about 9.7M B/D
  • Saudi oil output be below 10 B/D
  • OPEC+ conformity will be a lot better in 2H
  • demand not necessarily looking grim for 2020
  • Iran doesn’t want OPEC to condemn US at this meeting
  • we are already seeing oil demand pickup
  • it’s all pointing in the right direction
  • hopes for agreement on OPEC+ charter tomorrow
  • Iran agreed on all issues in meeting with Russia’s Novak
  • IRAQ: there’s a glut in oil market, therefore the rollover of output cuts
  • there is a unilateralism that’s a threat to OPEC
  • we take security of supply for world very seriously
  • Saudi’s plan to keep oil production reduced through March
  • market share is not the top priority for Saudi Arabia
  • we won’t pursue endless production cuts
  • we have cut production deepen of
  • not Saudi policy to keep cutting output endlessly
  • OPEC is more vibrant than ever
  • market is not unreasonably tight
  • consumers in US, elsewhere find market is very reasonable place

The global economy needs more than just a trade truce

Unless US and China can strike a trade deal (and soon), the outlook remains bleak for the global economy

PMI Manufacturing

The above highlights the June manufacturing PMI releases from today and you can easily spot a theme that we’re seeing worsening conditions globally. Even if you factor in releases from Southeast Asian i.e. Malaysia, Indonesia, Philippines, they’re mostly also lower and showing the same trend as per the above.
Despite some improvements in Germany, Turkey and South Africa, all three readings are still in contraction territory and aren’t providing any indication of any significant improvement in manufacturing activity in the coming months.
So, a trade truce may be good on paper but what the world really needs is a trade deal and less tensions. Otherwise, it’s hard to gather much optimism from the weekend when you start looking at the bigger picture.

Russia’s Novak: All ministers approve 9-month OPEC+ cuts extension

Comments by Russia’s energy minister, Alexander Novak

Russia OPEC
  • No proposal to extend cuts longer than 9 months
  • Iran confirmed in meeting that 9-month extension is good
  • All current OPEC+ quotas will be retained in the extension
It’ll be interesting to see how long the optimism here can last for oil. Nine months is certainly better than six months but with the same production quotas being restricted, I doubt it’ll help to address the oversupply issue in the market or at least it will struggle to do so.
We’ve already seen the struggles in 1H 2019 and what more in the second half of the year when seasonal demand tends to suffer a little more during the summer time.

PBOC’s Yi: China growth rate is right around 6%

Comments from Yi in Finland:

  • Shrinking labour market supply is one factor in slower growth
  • Increasing environmental standards also hurting growth
  • China labour supply peaked in 2010-2011
  • Growth rate will moderate as economy grows
  • Current account surplus to stay below 1% of GDP
  • Economy is basically driven by domestic demand
  • Consumption is now 2/3 of growth
  • China still has plenty of savings

Nothing surprising in the comments.

Eurozone June final manufacturing PMI 47.6 vs 47.8 prelim

Latest data released by Markit – 1 July 2019

Slight downtick to the final release sees the overall euro area reading fall a little in June compared to the 47.7 print in May. That said, this is more or less within initial estimates so it’s not really giving much new information about the sluggish manufacturing sector in the region seen in Q2 2019.