Articles

The report says that the government is considering to revive subsidies for electricity and natural gas in the summer months this year. It is likely that said subsidies will cover usage from July through to September, with a budget that could reach around ¥500 billion.

For now, the source says that the government is planning to use reserve funds. That as opposed to compiling a supplementary budget, with prime minister Takaichi already looking into the proposal.

Well, that’s a heavy cost but at least they’re choosing to tap into reserve funds here. With the Japanese yen currency already under immense pressure and the economic outlook being hampered significantly by the Middle East conflict, more fiscal pressures will not be welcome at this time.

The idea of the subsidies here is to help cover retail electricity and gas prices for the most part. That as the bigger impact of higher prices for LNG is expected to hit later around June.

As a reminder, Japan has already extended subsidies for gasoline prices amid the Middle East conflict. That already saw the government draw ¥2 trillion in reserves over the years.

But as energy prices – especially oil – continue to stay elevated, the worry here is that the funds for these subsidies will quickly dig the bottom of the barrel. It’s all on how long the Strait of Hormuz will remain closed at this stage. And the longer it stays closed, the more it will push the government into needing to consider a supplementary budget to fund the subsidies down the road.

In turn, that will be another big headwind for the yen currency as the Takaichi trade deepens.

This article was written by Justin Low at investinglive.com.

Here are all the state readings released around the same time:

• Bavaria April CPI +2.9% vs +2.8% y/y prior
• Brandenburg CPI +% vs +2.8% y/y prior (no data yet)
• Saxony CPI +3.0% vs +2.6% y/y prior
• Baden Wuerttemberg CPI +2.6% vs +2.5% y/y prior
• North Rhine Westphalia CPI +2.7% vs +2.7% y/y prior
• Hesse CPI +% vs +2.9% y/y prior (no data yet)

The estimates reaffirm a slight uptick in headline inflation. But at the balance, we might see the national reading later come in around 2.8% to 2.9%. So, that might be just a touch softer than the 3.0% expectation from economists. That being said, even at that region it will still mark the highest headline annual inflation in Germany since January 2024. And if it does touch the 3.0% mark, that will be the highest since December 2023.

Overall, surging energy prices is just continuing to leave its mark on consumer prices. And with it already feeding through to higher input cost inflation, it will only be a matter of time before it hits harder on core prices too. That especially as the Middle East conflict continues to drag on for longer.

This article was written by Justin Low at investinglive.com.

• Every Trader is a Forex Trader
• China PMI data points to export resilience but soft domestic demand remains the weak spot
• USD/JPY ticking higher above 160, no verbal intervention efforts so far today
• US military to present Trump with fresh options for military action
• ICYMI: Central banks buy 244 tons of gold in Q1 at fastest pace in over a year
• China private PMI surges to 52.2 in April, strongest factory reading since late 2020
• China private survey April manufacturing PMI 52.2 (expected 51.0, prior 50.8)
• China official April PMI Manufacturing 50.3 (expected 50.1) Non-manuf. 49.4 (exp 49.9)
• NZ business confidence crashes to -10.6 in April as cost shock rattles outlook – more
• PBOC sets USD/ CNY reference rate for today at 6.8628 (vs. estimate at 6.8414)
• New Zealand April business confidence in the hole at minus 10.6% vs. +32.5% in March
• Japan March industrial output falls 0.5% as Hormuz closure hits chemicals and fuels
• A desperate Trump pitches Maritime Freedom Construct coalition to reopen Strait of Hormuz
• Japan March Industrial production misses expectations while Retail Sales beat
• Bank of England set to hold at 3.75% as Iran war forces stagflation reckoning
• NZ makes RBNZ votes public as fin min Willis overhauls MPC transparency charter
• Preview: ECB expected to keep rates at 2% today. Lagarde tone on June takes centre stage
• Brazil’s cuts rate by 25bp to 14.50% but flags deanchored inflation and Middle East risks
• Goldman: UAE exit from OPEC introduces oil supply upside risk once Strait of Hormuz reopen

At a glance:

• US CENTCOM to brief Trump Thursday on Iran military options including infrastructure strike, Hormuz seizure and special forces uranium mission; Brent crude hits new war high
• China official manufacturing PMI 50.3 in April, above the 50.1 forecast; non-manufacturing slips to 49.4, a 40-month low, back into contraction
• China RatingDog private manufacturing PMI surges to 52.2, strongest since late 2020, reflecting outperformance of export-oriented private firms versus state-linked enterprises
• USD/JPY pushing toward 160.40 as yen weakens; no Japanese official intervention comments yet
• Bank of Japan Governor Ueda scheduled to speak June 3, ahead of the June 15-16 policy meeting, potentially flagging a rate hike
• Bank of England rate decision 1100 GMT, Bailey press conference 1130 GMT; hold expected
• ECB rate decision 1215 GMT, Lagarde press conference 1245 GMT; hold expected

It has been a busy session. The dominant headline is the Axios report that US CENTCOM will brief President Trump on Thursday on fresh military options against Iran, including a concentrated infrastructure strike, a potential ground operation to seize part of the Strait of Hormuz and a special forces mission to secure Iran’s uranium stockpile. Brent crude has risen to a new war high on the news.

From Asia, China’s PMI data delivered a split verdict: the official manufacturing PMI held narrowly above 50 at 50.3 while the non-manufacturing PMI slipped back into contraction at 49.4, exposing the gap between a resilient export-oriented factory sector and a struggling domestic economy. The private RatingDog manufacturing PMI told a more upbeat story, surging to 52.2, its strongest reading since late 2020, reflecting the better fortunes of China’s private and export-focused firms relative to their state-linked counterparts.

In currency markets, the yen continued to weaken with USD/JPY pushing toward 160.40 and no verbal intervention from Japanese officials as yet. Notably, the Bank of Japan has announced that Governor Ueda will speak on June 3, ahead of the June 15-16 policy meeting, a scheduling choice that markets may read as preparation for a rate hike signal.

Still to come today are rate decisions from the Bank of England at 1100 GMT and the European Central Bank at 1215 GMT. Both are expected to hold. Governor Bailey speaks at 1130 GMT and President Lagarde at 1245 GMT. See the previews above for the detail on what to watch.

This article was written by Eamonn Sheridan at investinglive.com.

A note from ING with a take on China’s data today.

China’s official manufacturing PMI held at 50.3 in April as export orders returned to growth for the first time since 2024, but the non-manufacturing PMI fell to a 40-month low of 49.4, exposing the weakness in domestic demand.

Summary:

• China’s official manufacturing PMI edged down to 50.3 in April from 50.4 in March, coming in above both ING’s forecast and broader market expectations, with production ticking up to 51.5 and employment improving slightly though remaining in contraction at 48.8
• Overall new orders dropped to 50.6 from 51.6, pointing to weak domestic demand, while the new export orders subindex rose to 50.3, returning to expansion for the first time since April 2024
• The imports subindex also returned to expansion at 50.1 for the first time since March 2024, suggesting trade activity held up solidly through the month
• Raw material purchase prices remained elevated at 63.7 and ex-factory prices at 55.1, both slightly lower than March but still consistent with a continuing reflation trend that ING expects the May inflation data to confirm
• The private RatingDog manufacturing PMI beat expectations more decisively, rising to 52.2 from 50.8, with ING attributing the outperformance to the index’s heavier weighting toward export-oriented private firms
• China’s non-manufacturing PMI fell to 49.4 in April, matching January’s reading for a 40-month low, with the new orders subindex dropping to 44.3, its lowest level since 2022
• Non-manufacturing export orders remained in contraction for a 16th consecutive month at 47.3, while the sales price component stayed contractionary for a 31st straight month at 48.1, indicating cost pressures have not yet been passed on to consumers in the services sector
• ING attributed the underperformance in services to the sector’s greater domestic orientation relative to manufacturing, with soft consumer demand increasingly weighing on the non-manufacturing reading

China’s April purchasing managers’ index data presented a familiar but increasingly pronounced split: a manufacturing sector drawing support from a recovery in external demand, and a services sector struggling under the weight of soft domestic consumption that shows little sign of turning around.

The official manufacturing PMI edged down to 50.3 from 50.4 in March, a negligible move that nonetheless came in above both ING’s forecast and broader market consensus. Within the detail, production ticked up 0.1 percentage points to 51.5 and employment improved marginally, though it remained in contraction at 48.8. The more significant movement was in orders. Overall new orders fell to 50.6 from 51.6, a drop that ING analysts attributed to continued weakness in domestic demand. The offset came from the external side: the new export orders subindex climbed 1.2 percentage points to 50.3, returning to expansionary territory for the first time since April 2024. The imports subindex also nudged back above 50 for the first time since March 2024, a signal that trade flows held up through the month despite the elevated uncertainty surrounding the Middle East conflict and its effects on shipping costs and supply chains.

The private RatingDog PMI, compiled by S&P Global, told a more emphatic version of the same story, rising to 52.2 from 50.8, well above the 51.0 consensus. ING noted that the index’s heavier representation of export-oriented private manufacturers explained much of the outperformance relative to the official survey, reinforcing the view that external demand is the engine of China’s current recovery while domestic demand remains the drag.

On prices, raw material purchase prices held at 63.7 and ex-factory prices at 55.1, both slightly below March but still elevated, consistent with a reflation trend that ING expects to be confirmed when the May CPI data is released on May 11.

The services sector offered little comfort. The non-manufacturing PMI fell to 49.4, matching January’s reading for a 40-month low, with the new orders subindex dropping to 44.3, its weakest since 2022. Non-manufacturing export orders remained in contraction for a 16th consecutive month, and the sales price component stayed below 50 for a 31st straight month, indicating that cost pressures are not yet being passed on to end consumers. The only relief was a slight uptick in business expectations to 54.7. ING’s conclusion was direct: as China’s services sector is more domestically oriented than manufacturing, it has begun to underperform as soft consumer demand increasingly dominates the picture, and the gap between the two sides of the economy looks set to persist until meaningful demand-side support arrives.

—

The split between manufacturing and services is the story here, and it matters for how markets read China’s recovery trajectory. Manufacturing is holding up, supported by external demand, with export orders back in expansion for the first time since April 2024. But the non-manufacturing PMI sliding to 49.4, a 40-month low, confirms that domestic consumers and the services sector are not participating in the rebound. That divergence limits the bullish read on the headline data and keeps pressure on Beijing to deliver demand-side stimulus rather than relying on export momentum that could easily be disrupted by further Hormuz complications or a global growth slowdown. On inflation, elevated raw material purchase prices at 63.7 and ex-factory prices at 55.1 confirm the reflation trend is intact, pointing toward further upside in the May CPI print due on the 11th.

This article was written by Eamonn Sheridan at investinglive.com.

S&P Global Rating Dog PMI April 2026 manufacturing PMI improves and beats at 52.2

• expected 51.0, prior 50.8

Earlier:

• China official April PMI Manufacturing 50.3 (expected 50.1) Non-manuf. 49.4 (exp 49.9)

I’ll have more to come on this separately

This article was written by Eamonn Sheridan at investinglive.com.

China’s RatingDog manufacturing PMI rose to 52.2 in April from 50.8 in March, the strongest reading since late 2020, beating the 51.0 forecast, as output and new orders surged and input costs hit a four-year high.

Earlier:

• China official April PMI Manufacturing 50.3 (expected 50.1) Non-manuf. 49.4 (exp 49.9)

Summary:

• The RatingDog China General Manufacturing PMI, compiled by S&P Global, rose to 52.2 in April from 50.8 in March, beating the 51.0 consensus forecast and marking the strongest reading since late 2020
• Output grew at the fastest pace since June 2024, driven by stronger demand, operational improvements and new product launches, with the consumer goods sector leading the expansion
• New orders surged, with export orders expanding for a fourth consecutive month, the longest such run since the first half of 2024
• Input price inflation reached its highest level in just over four years, with output prices and export charges both rising at the fastest pace since October 2021 as Middle East war costs fed through to factory gates
• Employment intentions remained cautious despite rising order backlogs, which increased for a third straight month across all sub-sectors, with investment goods producers seeing the sharpest build-up
• Business sentiment improved from March and ran above the two-year average, with RatingDog founder Yao Yu attributing the recovery to order growth and price-effect optimism
• China’s Q1 GDP grew 5%, at the top of its 4.5-5% target range, with ample oil reserves and a diversified energy mix cited as key buffers against the Middle East shock

China’s manufacturing sector expanded at its fastest pace since late 2020 in April, with the private RatingDog PMI compiled by S&P Global rising to 52.2 from 50.8 in March, comfortably beating the 51.0 analyst consensus and arriving well above the official NBS manufacturing PMI reading of 50.1 published earlier in the day. The divergence between the two surveys reflects their different sampling bases, with the RatingDog index capturing a broader range of private and export-oriented firms that appear to be faring considerably better than the larger state-linked enterprises more heavily represented in the official figure.

Output growth accelerated to its fastest pace since June 2024, with firms citing stronger demand, new product launches and operational improvements. The expansion was broad-based but strongest in consumer goods. New orders surged, and export orders grew for a fourth consecutive month, the longest positive run since the first half of 2024, suggesting external demand has held up better than many had anticipated given the disruption flowing from the Middle East conflict and elevated shipping costs.

The inflation data embedded in the survey is the element most relevant to global markets. Input price inflation reached its highest level in just over four years as energy and raw material costs climbed on the back of the Iran war, and firms raised output prices at their fastest pace since October 2021. Export charges also increased at the quickest rate since that period. The pass-through was uneven: some exporters managed to transfer the additional costs to buyers, while others continued to absorb the pressure against already thin margins. The net effect is a factory-gate price environment that will add to goods inflation in import markets and complicate the disinflation picture for central banks in Europe and beyond.

The one soft note in an otherwise strong report was employment. Despite rising backlogs of work across all three sub-sectors, manufacturers remained cautious about adding staff, a signal that confidence in the recovery’s durability has not yet converted into committed hiring.

—

A print of 52.2 against a 51.0 forecast and the official PMI’s 50.1 reading is a meaningful upside surprise that complicates the bearish China narrative that had built ahead of the data. The divergence between the private RatingDog survey and the official NBS figure is notable: the former captures a broader range of private and export-oriented manufacturers, and the gap between the two suggests the recovery is unevenly distributed, with larger state-linked firms faring less well than the private sector. For commodity markets, the strong output and new orders readings are a modest demand-supportive signal, though the inflation detail is the more consequential number. Input price inflation at a four-year high and output prices rising at the fastest pace since October 2021 confirm that the Middle East energy shock is feeding through to Chinese factory gate prices, which matters for global goods inflation and for trading partners absorbing Chinese exports. The employment caution is a soft underbelly: firms are not converting order strength into hiring, suggesting confidence in the durability of the recovery remains fragile.

This article was written by Eamonn Sheridan at investinglive.com.

ANZ NZ business survey, April 2026

Business Confidence is -10.6%

prior +32.5%

Activity outlook +19.5

• prior +39.3

I’ll have more to come on this separately

This article was written by Eamonn Sheridan at investinglive.com.

New Zealand business confidence collapsed from +32.5 to -10.6 in April as cost expectations hit a three-year high, though wage and pricing intentions were steadier, offering the RBNZ limited reassurance. (

Summary:

• ANZ’s business confidence index fell from +32.5 in March to -10.6 in April, a swing of 43 points, though ANZ noted late-March responses were already averaging -22.5, suggesting some stabilisation since the initial shock
• Own activity outlook dropped from 39.3 to 19.6 in a broad-based fall across sectors, with retail the weakest at zero; profit expectations swung from +19.7 to -13.3, with agriculture the worst performer at -40
• Employment intentions turned negative for the first time since mid-2024, falling from +9.4 to -2.7, pointing to a softening labour market ahead
• Cost expectations for the next three months surged to 4.57% from 2.99%, the highest reading since May 2023, with the implied margin squeeze between expected costs and prices drawing comparison to 2022
• One-year inflation expectations rose to 3.81% from 3.08%, the highest since February 2024, with uncertainty around future inflation also increasing as measured by the interquartile range of responses
• Pricing intentions edged down slightly to a net 57.7% from 60.3%, and wage expectations for the next 12 months eased to 2.53% from 2.74%, which ANZ described as offering the RBNZ some reassurance
• Export intentions fell sharply from 15.2 to 1.1, with agriculture and manufacturing both well down; residential construction intentions dropped to 11.8 from 35.3, the lowest since July 2024
• Past activity, ANZ’s best GDP proxy within the survey, held relatively steady at 16.9, with manufacturing the standout performer at 31.2, possibly reflecting stockpiling ahead of anticipated price increases or supply shortages

New Zealand business confidence fell sharply in April, with ANZ’s headline index dropping 43 points from +32.5 in March to -10.6, as the cost shock flowing from the Middle East conflict weighed heavily on firms’ activity and profit expectations. The swing is stark, but ANZ Research cautioned that late-March survey responses, taken after the initial geopolitical shock, had already been averaging -22.5, making the April print a partial stabilisation rather than a fresh deterioration.

The detail across activity indicators was broadly weak. Own activity outlook more than halved from 39.3 to 19.6, with retail the softest sector at zero. Profit expectations swung from +19.7 to -13.3, with agriculture the hardest hit at -40 as input cost pressures bear down on farm-level margins. Export intentions fell from 15.2 to just 1.1, with significant declines in both agriculture and manufacturing. Residential construction intentions dropped to 11.8, the lowest reading since July 2024. Employment intentions turned negative for the first time since mid-2024, falling to -2.7 from +9.4, an early warning that the labour market may soften in the months ahead as firms defer hiring decisions until the outlook becomes clearer.

The inflation picture is the most consequential element for monetary policy. Cost expectations for the next three months surged to 4.57% from 2.99%, the highest reading since May 2023, and one-year inflation expectations rose to 3.81% from 3.08%, the highest since February 2024. ANZ noted that the gap between firms’ expected cost increases of 4.6% and expected price increases of 2.4% over the next three months implies a degree of margin compression similar to the squeeze experienced in 2022. Uncertainty around future inflation is also rising, complicating business planning and investment decisions across sectors.

The partial offset, and the data point the RBNZ will cling to, is that pricing intentions dipped slightly on a net basis and wage expectations eased to 2.53% from 2.74%. ANZ described the wage reading as reassuring from an inflation-fighting perspective, noting that contained wage-setting intentions reduce the risk of the cost shock becoming embedded in a wage-price spiral. Past activity, the survey’s most reliable GDP proxy, held relatively steady at 16.9, with manufacturing the standout at 31.2, a reading ANZ suggested may reflect firms stockpiling inputs in anticipation of tighter supply or higher prices later.

ANZ’s overall assessment, titled “a wall of worry,” was measured. The charts are ugly, the bank acknowledged, but many activity indicators came in above the levels implied by late-March responses, suggesting the initial confidence shock has partially dissipated. The RBNZ, which recently began an easing cycle and has held the OCR at 3.25%, faces a data environment that gives it little room to move confidently in either direction: growth indicators are softening while cost and inflation expectations are rising, a combination that argues strongly for the cautious, data-dependent approach the bank has signalled.

Reserve Bank of New Zealand Governor Anna Breman

—

The headline swing from +32.5 to -10.6 is dramatic, but ANZ cautions against reading it at face value. Late-March responses, taken after the initial shock of Middle East developments, were already averaging -22.5, meaning the April print actually represents some stabilisation rather than a fresh lunge lower. The more policy-relevant signal for the RBNZ is in the inflation detail. Cost expectations for the next three months jumped to 4.57% from 2.99%, the highest since May 2023, while one-year inflation expectations rose to 3.81% from 3.08%, the highest since February 2024. Both sit uncomfortably above the RBNZ’s 1-3% target band. The partial offset is that pricing intentions edged down slightly and wage expectations eased to 2.53% from 2.74%, giving the RBNZ a small degree of reassurance that the cost shock is not yet feeding into a wage-price spiral. Employment intentions turning negative for the first time since mid-2024 adds a growth concern alongside the inflation picture, leaving the RBNZ navigating a classic stagflationary tension.

This article was written by Eamonn Sheridan at investinglive.com.

China official April PMI Manufacturing 50.3

• expected 50.1, prior 50.4

Non-manufacturing 49.4

• expected 49.9, prior 50.1

Composite 50.1

I’ll have more to come on this separately.

—

Rating Dog Manufacturing PMI still to come

This article was written by Eamonn Sheridan at investinglive.com.

Japan data, March 2026:

Industrial Production (preliminary) -0.5% m/m

• expected +1.1%, prior -2.0%

and +2.3% y/y

• prior +0.4%

Manufacturers see April output -0.5% m.m (prior -2.6%) and May output +2.2% m/m

–

Retail Sales YoY +1.7% y/y

• expected +0.8%, prior -0.2%

and +1.3% m/m

• prior -2.0%

This article was written by Eamonn Sheridan at investinglive.com.

Official Chinese PMIs are expected to have slipped in April. The private survey manufacturing PMI, from Rating Dog (ps there is no better named data provider than this), on the other hand, is expected to have risen.

I’ll get a preview of this posted soon.

This article was written by Eamonn Sheridan at investinglive.com.

China’s official manufacturing PMI is forecast to ease to 50.1 in April from 50.4 in March, as Iran war-driven energy costs pressure factory margins, a Reuters poll of 27 economists shows.

Summary:

• The official manufacturing PMI is forecast at 50.1 for April, down from 50.4 in March, according to the median estimate from a Reuters poll of 27 economists, with the data due from the National Bureau of Statistics on Thursday
• China’s Q1 GDP grew 5%, hitting the upper end of the government’s annual target, and industrial profits expanded at their fastest pace in six months in March, providing a relatively stable baseline ahead of the PMI release
• Factory-gate prices reversed a 41-month deflationary run in March, rising sharply in energy-intensive sectors including non-ferrous metal mining, though ANZ analysts have described cost-push inflation of this kind as negative for growth
• The People’s Bank of China kept benchmark loan prime rates on hold for an eleventh consecutive month last week, with Q1 momentum and a pickup in inflation reducing pressure for fresh easing
• Moody’s revised China’s sovereign outlook to stable from negative earlier this week, citing resilient economic and fiscal fundamentals
• China’s top leadership acknowledged a strong start to 2026 but flagged difficulties ahead, pledging to strengthen energy security and pursue greater technological self-sufficiency
• The extent to which China’s strategic reserves, diversified energy mix and robust electronics export demand continue to insulate the economy from the Iran conflict’s fallout is the central question the April data will begin to answer

China’s official manufacturing purchasing managers’ index is expected to slip to 50.1 in April from 50.4 in March, according to the median forecast from a Reuters poll of 27 economists, with the National Bureau of Statistics set to publish the result on Thursday. The reading would mark the third consecutive month of expansion in the factory sector but at a pace that points to increasing strain from the energy price shock flowing through global supply chains since the escalation of the US-Israeli war on Iran.

The broader economic backdrop entering the release is more resilient than many had feared at the start of the year. GDP expanded 5% in the first quarter, landing at the upper end of Beijing’s annual growth target, and industrial profits rose at their quickest rate in six months in March. That combination has reduced immediate pressure on policymakers to deploy large-scale stimulus, a position reinforced by Moody’s decision earlier this week to revise China’s sovereign outlook to stable from negative, citing what the agency described as resilient economic and fiscal strength. The People’s Bank of China kept benchmark loan prime rates unchanged for an eleventh straight month last week, consistent with a central bank that sees sufficient momentum to hold its fire on further easing.

But the conditions underpinning that relative optimism are showing signs of strain. Factory-gate prices in China ended a 41-month deflationary run in March, with prices climbing in energy-intensive industries including non-ferrous metal mining as the costs of higher global crude and freight rates fed through to domestic producers. The distinction between demand-driven and cost-driven inflation matters considerably here. Analysts at ANZ have characterised the current configuration as unfriendly to the economy: firms absorbing higher input costs without a corresponding pickup in end-demand face margin compression rather than pricing power, and over time that dynamic risks converting a slowing PMI into an outright contraction signal.

China’s initial insulation from the Iran conflict has rested on three pillars: ample strategic petroleum reserves that cushioned the first wave of oil price increases, a diversified energy mix that reduces dependence on any single import corridor, and strong global demand for Chinese-made electronics that sustained export volumes even as goods export growth softened in March. All three remain in place, but none is unlimited. Strategic reserves can be drawn down only so far before they require replenishment at elevated market prices, while electronics demand is itself sensitive to the global growth slowdown that prolonged Middle East disruption threatens to accelerate.

China’s top leaders acknowledged the complexity of that outlook in a meeting earlier this week, describing the economy as having achieved a strong start to 2026 while also facing difficulties and challenges. They committed to strengthening energy security alongside technological development and self-sufficiency, language that reflects a leadership reading the geopolitical environment as a structural rather than transitory constraint on growth. Thursday’s PMI will be the first major official data point of the month to test whether April marks a continuation of the first quarter’s resilience or the beginning of a more material deceleration.

—

Official PMIs due at 2130 US Eastern time and the unofficial follows at 2145:

—

A reading of 50.1 keeps China in expansion but confirms directional softening, and in commodity markets direction matters as much as level. Base metals are the most exposed: copper and aluminium have already been whipsawed by Middle East supply disruption, and a weakening Chinese factory PMI removes a key demand support. Oil is more ambiguous, with softer Chinese industrial activity pulling against the same Iran conflict that is constraining supply on the other side of the equation.

The more pointed concern is the inflation dynamic. Factory-gate prices ended a 41-month deflationary run in March, but the driver is cost-push rather than demand-pull, a configuration ANZ has described as unfriendly to growth. With the PBOC on hold for an eleventh consecutive month and Q1 GDP providing political cover to sit tight, policymakers have room to wait, but a PMI trending toward 50.0 alongside margin-compressing input inflation would shift that calculus quickly.

This article was written by Eamonn Sheridan at investinglive.com.