In an increasingly uncertain world economy, global manufacturing continues to keep an eye firmly fixed upon the state of world markets.
Fuel prices continue to escalate, with concerns over US domestic stocks leading to the price of crude hitting a record high of $135 a barrel - and with no indication of a slowdown in the immediate future.
Many reasons have been put forward to account for such an unprecedentedly bleak outlook. According to some commentators, increased demand from China as its manufacturing sector continues to expand and vehicle ownership grows has led to a shortening of supply.
Others attribute current high prices to a deliberate decision on the part of OPEC to hold back supply and thus artificially inflate prices.
However, these factors are no different than they have been for some time, so the question that should be asked is not so much “why?” as “why now?” The answer seems to be that speculators and investors are adopting forward positions to insulate themselves against future price increases. Counter-intuitively, price rises in the oil market are actually leading to an increase in demand.
Whatever the reasons for the current state of the market, one thing is clear; manufacturers will need to adapt their policies to take account of it.
Currencies
The trends in the global currency markets remain unchanged, with the dollar continuing to weaken internationally against the euro, the yuan and the pound. Despite a recent one-day renaissance, the US currency remains exposed as increasing oil prices and uninspiring growth forecasts point towards a period of stagflation in the US, which has serious repercussions for the wider global economy.
Commodity prices
More positively, commodity prices are attaining a measure of equilibrium following a period of sustained rises, with copper levelling out at $8,200 per tonne. Reduced demand from China, which saw a 31% decrease in imports of refined copper in April compared to 12 months previously, has helped to settle the price and analysts predict a period of stability in the market.
Similarly, gold prices have retreated following the mini-crisis that saw global prices top the $1,000 per ounce mark and caused investors and traders to desert the market temporarily. The commodity is still being employed by investors as a hedge against some of the financial problems associated with soaring oil prices.
Craig Wright is chief executive of Exception