Commodities: Across-the-board losses after China PMI amid trade concerns

The commodities complex was bathed in red at the start of the week with losses to be seen almost right-across-the-board, amid ongoing trade concerns and sharp gains in the US dollar index.

As of 1836 BST, the Bloomberg commodity index was suffering a violent sell-off, falling 1.65% to 85.96, alongside a 0.65% jump in the US dollar spot index to 95.0860, pushing it to trade back just below its 52-week highs at 96.5120.

On the trade front, all eyes were on a looming 6 July headline for the US to impose - most likely - tarriffs on $34bn-worth of Chinese goods. Ahead of that, at the weekend Ottawa's own counter-tarriffs on $12.6bn-worth of US made goods came into effect, alongside reports of veiled threats from officials in Brussels of similar moves if the US administration acted against its car exports.

Also at the weekend, US President Donald Trump took aim at what he described as OPEC's manipulation of oil prices, piling the pressure on the cartel to pump more.

His remarks appeared to send Brent crude oil futures for September delivery lower by 1.80% to $77.80 a barrel on the ICE.

Meanwhile, over in NYMEX trading, gasoline, natural gas and heating oil futures were all trading lower by a similar amount.

Stoking gains in the Greenback, which in turn was further weighing on prices for commodities, the closely-followed US ISM factory sector index surprised to the upside, rising from a print of 58.7 for May to 60.2 in June.

Similar indices out in China, the euro area and the UK on the other hand printed below economists' forecasts, albeit only marginally so, aside from that in Britain.

Commenting on the possible implications of the slightly weaker-than-expected Chinese PMI, analysts at Capital Economics said: "China's unofficial and official manufacturing PMIs point to a somewhat softer economy in June. We expect further weakness ahead, which will continue to weigh on the prices of most commodities.

"Indeed, even if the worst fears of a trade war fade, we expect slower growth in China to prevent any significant rebound in industrial metals prices."

On Monday morning, Caixin had reported a dip in its manufacturing sector China Purchasing Managers' Index from 51.1 for May to 51.0 in June (consensus: 51.1).

A similar official PMI experienced a larger fall, from 51.9 to 51.5.

In the agricultural space, corn and wheat futures on CBoT were especially hard hit, with the latter retreating 3.84% to $4.82 a bushel.

Meanwhile, in the metals space, spot platinum was down 4.16% to $817.20/oz. and COMEX copper off by 0.665 to $2.9465/lb..

August gold futures on COMEX were also on the back foot, slipping 0.96% to $1,242.50/oz..