Little on the horizon to lift investor sentiment

As the fall-out from the attacks on Aramco began to fade, the spotlight swung firmly back to concerns about global economic activity this week with falls in the prices of most industrial commodities. What’s more, our forecast that economic indicators will continue to deteriorate in the coming months suggests that investors will remain risk averse, with negative implications for prices. As a result, markets will closely watch economic data due next week. On Monday, China’s official and unofficial PMIs for September are expected to show renewed weakness, which could depress industrial metals prices in particular. That said, prices could drift thereafter as China’s markets close for Golden Week. Meanwhile, in the US, we expect the September ISM Manufacturing index (due on Tuesday) to recover a little after its slump in August, but the September employment report (Friday) is likely to be subdued. All told, next week’s data are unlikely to prompt a meaningful return of investor risk appetite.