Oil Prices Fall As OPEC+ Raises Supply Despite Uncertain Demand Conditions

On Tuesday, oil prices dropped by over $1 per barrel due to doubts surrounding an OPEC+ move to increase supply later in the year, amid a global market grappling with weakening demand signals. Brent crude futures settled down 84 cents, or 1.07%, at $77.52 a barrel while U.S. West Texas Intermediate crude futures finished down 97 cents, or 1.31%, at $73.25. On Sunday, OPEC+ and its allies led by Russia, decided to extend the majority of their oil production cuts until 2025. However, they allowed for gradual adjustments in the form of voluntary output increases from eight members, commencing in October.

Equities, Commodity Decline Amid Weak US Data suggesting Economic Slowdown

On Tuesday, global equities and commodity prices declined as investors grew concerned about signs indicating a potential decline in the exceptional performance of the U.S. economy. This unease followed the revelation of unexpected weakness in business activity data. Tuesday’s data revealed that  job openings fell more than forecast in April to the lowest in more than three years. By the end of the session in New York, the MSCI All-World index was down 0.2%. On Wall Street, major stock indices reversed losses to take off  modest gains. The S&P 500 index (.SPX) added 0.2%, the Dow Jones Industrial Average (.DJI) surged by  0.4% and the Nasdaq Composite (.IXIC), was up by 0.2%.

China’s Manufacturing Shows Surge In PMI

China saw its factory activity increase at the quickest pace in approximately two years in May, attributed to improvements in production and a surge in new orders, notably among smaller enterprises. TheS&P Global manufacturing PMI increase to 51.7 in May from 51.4 the previous month, the highest since June 2022.The 50-point mark separates growth from contraction. However, output rose at the fastest pace since June 2022, with firms in the consumer segment reporting sharp growth in May while  new export orders grew at a much slower pace in May, coming off April’s 41-month high. The outlook for China’s trade remained volatile due to a lacklustre global economy.

Russia’s PMI Maintains Growth Momentum In May

Russia’s manufacturing sector saw a slight acceleration in growth in May, buoyed by a significant increase in employment amid rising demand. In the month of May, the S&P Global Purchasing Managers’ Index (PMI) for Russian manufacturing increased to 54.4 from 54.3 in April, remaining above the threshold of 50 that indicates expansion in activity. It was also close to the 18-year peak of 55.7 recorded in March. However, Since the invasion of Ukraine in February 2022, Russia has significantly increased its investment in the manufacturing of military equipment and weapons. This has provided a boost to the sector, which may have otherwise faced challenges due to certain markets distancing themselves from Moscow.

Pakistan’s Inflation Rate Decelerates To 11.8%, Its Lowest In 30 Months

Pakistan’s Consumer Price Index (CPI) increased by 11.8% in may, compared to the same period last year, marking the lowest level in 30 months and falling below the projections set by the finance ministry. Pakistan has grappled with inflation exceeding 20% since May 2022. In May of the previous year, inflation surged to as high as 38% as the country implemented reforms under an International Monetary Fund bailout program. However, Month-on-month consumer declined by 3.2%, the biggest drop in more than two years. The inflation forecast for May 2024 shows a continued decline, attributed to high inflation rates in the previous year and improvement  in the domestic supply chain of perishable items and staple foods like wheat, along with reduced transportation expenses.