Demand fears taking the reins once again

Despite the much-vaunted “mini-deal” on US-China trade, most industrial commodity prices fell this week. Uninspiring activity data across major commodity consumers, notably for the US and China, appear to have reignited fears over the health of demand. Regardless of whether President Trump and President Xi end up inking an initial deal, we think that the current slowdown in global economic growth has further to run, which bodes ill for the prices of industrial commodities. A slew of survey data will be released for the US and euro-zone next week. US flash PMIs for October (Thursday) should be broadly unchanged from September but still point to weak economic growth in the US. Meanwhile, euro-zone flash PMI data (Thursday) and the German Ifo survey (Friday) for October are likely to remain downbeat. Consequently, industrial commodity prices are likely to stay in the doldrums.