Commodities: Metals weak after official China manufacturing PMI, Nomura cautious

Commodity prices came under selling pressure at the middle of the week on the back of Chinese factory sector survey results that some economists described as "not pretty" and residual gains for the Greenback.

As of 2014 GMT, the Bloomberg commodity index was trading 0.47% lower to 83.19, alongside a gain of 0.05% to 97.0630 for the US dollar spot index, although the latter had come off its best levels of the session.

On Wednesday, the US dollar spot index had broken out to a fresh 52-week high.

The 'official' Chinese manufacturing sector Purchasing Managers Index, published overnight, revealed a drop from a reading of 50.8 for September to 50.2 in October, alongside a sharp drop in the official services PMI from 54.9 to 53.9.

Commenting on those figures, Freya Beamish at Capital Economics said: "The official PMI surveys for October provided the first glimpse of how the escalation in U.S. tariffs in late September has impacted China's economy.

"And the picture isn't pretty."

Nevertheless, the weak data reportedly prompted Chinese Politburo members, in a meeting overnight, to make the case for more "pre-emptive" measures to help alleviate conditions.

On a related note, the day before, economists at Nomura had told clients to expect the economic slowdown in China to worsen in Spring 2019, although a brief respite was likely in the last quarter of 2018, in part as Chinese exports front-load overseas sales to front-run the risk of further US sanctions.

Against that backdrop, all three-month base metals futures on the LME finished lower, aside from tin.

In the case of copper, three-month futures closed at $5,992 per metric tonne, having started the day out from $6,027 per tonne.

West Texas Intermediate for next month delivery on NYMEX was also on the back foot, erasing 1.84% to $64.96 a barrel, after the US Department of Energy reported a 3.2m barrel build for the week ending on 26 October.

Similarly-dated NYMEX gasoline was also lower, by 2.10% to $1.7680a gallon, even as the DoE said stockpiles fell by 3.2m barrels over that same weak.

Gold was also notably weaker, with December futures on COMEX erasing 0.71% to $1,216.60/oz..