Sense of calm may not last

The prices of most industrial commodity prices rose this week on hopes that the coronavirus is near to its peak and that economic activity in Asia will start to pick up soon. The announcement of output cuts by several metal producers in China has also put the supply side in the spotlight. However, we think it is too soon to start to assess the economic fallout given that there is still considerable uncertainty about the scale and duration of the epidemic. Next week, investors will be looking for clarity on the impact of coronavirus-related disruption in the economic data. Attention will be paid to the range of flash manufacturing PMIs for February, particularly those in Asia, as these should provide an early indication of how significantly the virus is affecting global manufacturing supply chains. We expect the data to be weak, but if they are better-than-expected then industrial commodity prices could see further gains.