Commodities Daily - August 2, 2019

> Oil slumps after Trump threatens tariffs on almost all Chinese imports; US jobs report eyed today. Investors will now focus on China's response to Trump's threat, as well as the reaction of the Fed, which might have to alter its stance and deliver two more rate cuts this year. In terms of today's calendar, the US jobs report is due (15:30 Moscow time). We think that expected upbeat data (especially if the wage increase is bigger than last time) would prove bearish for stocks as expectations of aggressive Fed rate cuts would fall, but be supportive for oil market fundamentals, as the oil demand outlook will be seen as improving. We expect Brent to trade within a $61-62/bbl range today, caught between these two factors.> Gold lurches higher after US announces new import tariffs on Chinese goods. Today sees the publication of US employment data. Given the surge in geopolitical risk, we expect gold to hold above $1,430/oz, and it could test $1,450/oz if China announces a response.> Base metals under pressure as Trump sparks new escalation in trade war. This morning base metals are selling off across the board: zinc is down 1.7%, copper 1.5% and nickel 1.2%. We expect the market environment to remain negative as the London session gets underway. The main question on investors' minds will be what kind of countermeasures China may take.