Morning Report – Monday 1st June
Violence erupted across the U.S. as protesters clashed with Police from New York to Los Angeles, leaving behind burnt out police cars and gutted storefronts. Several cities summoned the National Guard to help calm the fury following the killing of George Floyd. Some mayors imposed curfews. Donald Trump vowed to stop what he called mob violence and said he was designating Antifa a domestic terrorism organisation.
Hong Kong and Chinese stocks led a rally in Asia after Trump stopped short of specifying tougher sanctions over a national security law for the former British colony. FTSE 100 futures gained, the FT reported over the weekend that the U.K. is preparing more stimulus. S&P 500 futures fell amid concern America’s violent protests could hamper an economic recovery. Treasuries were steady. Gold rose.
The G-7 meeting in June will be delayed with a new guest list. Trump said he’s planning an expanded meeting in the autumn, potentially even after the November election. The president said he’d like to extend an invitation to leaders from Russia, Australia, India and South Korea as well the current participants, calling the current setup “outdated.” China was obviously not on the list.
The British government is following scientific advice in cautiously easing the coronavirus lockdown, Business Secretary Alok Sharma said on Monday, after criticism from some prominent epidemiologists. The pound is benefitting from general dollar weakness and is on track for its third week of gains even though concerns remain about potential hard Brexit.
The European Central Bank meets on Thursday with investors hoping that policymakers will deliver yet more stimulus for an economy battered by the coronavirus pandemic. A 1.85 trillion euro fiscal package proposed by the European Commission to lift the region’s economy eases the pressure to act speedily. However, for many market participants, the case for more immediate ECB stimulus is compelling. The euro zone economy contracted at a record rate in the first quarter with an even worse performance anticipated in the second.
Riskier currencies rose against the dollar this morning as investors looked to positive signs from China’s post-coronavirus economic recovery and wagered on an easing in tensions with the US. No new tariffs were imposed on China on Friday which may reduce the risk of tensions intensifying in the new short term.
Main Economic Data/Central Banks/Government (All Times BST)
- 7:00 a.m.: Russia May manufacturing PMI
- 8:00 a.m.: Turkey May manufacturing PMI
- 8:15 a.m.: Spain May manufacturing PMI
- 8:45 a.m.: Italy May manufacturing PMI
- 8:50 a.m.: France May manufacturing PMI
- 8:55 a.m.: Germany May manufacturing PMI
- 9:00 a.m.: Euro-Area May manufacturing PMI
- 9:30 a.m.: U.K. May manufacturing PMI