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World equities edge higher despite U.S.-China tensions

Published 05/31/2020, 08:26 PM
Updated 06/01/2020, 02:25 PM
© Reuters. A passerby wearing a protective face mask, following an outbreak of the coronavirus, walks past an electronic board showing the graphs of the recent movements of Japan's Nikkei share average outside a brokerage in Tokyo

© Reuters. A passerby wearing a protective face mask, following an outbreak of the coronavirus, walks past an electronic board showing the graphs of the recent movements of Japan's Nikkei share average outside a brokerage in Tokyo

By David Randall

NEW YORK (Reuters) - World stock markets hovered near three-month highs and safe-haven government bonds inched lower as risk appetite grew on signs that the global economic downturn has bottomed, despite worries over violent protests in the United States and unease over Washington's standoff with Beijing.

U.S. President Donald Trump left a trade deal with China intact Friday despite moving to end Washington's special treatment for Hong Kong in retaliation for Beijing seeking to impose new security legislation on the city.

China has asked state-owned firms to halt purchases of soybeans and pork from the United States in response, two people familiar with the matter said.

"The Trump rhetoric against China and trade impediments against Hong Kong could have been a lot worse, hence the performance of those markets this morning, which has helped the risk backdrop," said Chris Bailey, European strategist at wealth manager Raymond James.

MSCI (NYSE:MSCI)'s gauge of stocks across the globe (MIWD00000PUS) gained 0.78% following broad gains in Asia and Europe. The index (MIWD00000PUS) is up more than 35% from its March lows.

In midday trading on Wall Street, the Dow Jones Industrial Average (DJI) rose 60.07 points, or 0.24%, to 25,443.18, the S&P 500 (SPX) gained 6.13 points, or 0.20%, to 3,050.44 and the Nasdaq Composite (IXIC) added 37.43 points, or 0.39%, to 9,527.31.

Signs of a rebound from the global coronavirus lockdown helped bolster global equities and push safe haven assets lower. France's manufacturing activity rose in May as the country began to emerge from a nearly two-month coronavirus lockdown, pulling the sector out of a nosedive that had seen activity hit a record low a month earlier, a survey released on Monday showed.

An official business survey from China showed its factory activity grew at a slower pace in May but momentum in the services and construction sectors quickened.

U.S. manufacturing activity eased off an 11-year low in May, though a full recovery from the COVID-19 crisis could take years because of high unemployment.

Benchmark 10-year notes (US10YT=RR) last fell 10/32 in price to yield 0.677%, from 0.644% late on Friday.

Bond investors suspect economies will need massive amounts of central bank support long after they reopen and that is keeping yields super low even as governments borrow much more.

"Current unemployment numbers go far beyond what has been experienced in any post-war recession," Barclays (LON:BARC) economist Christian Keller wrote in a note. "To the extent that some sectors may never return to pre-pandemic business-as-usual."

A weekend of violent U.S. protests over race and policing could present another setback for the economy which was only just emerging from the steepest downturn since the Great Depression.

Following poor data on spending and trade out on Friday, the Atlanta Federal Reserve estimated economic output could drop a staggering 51% annualized in the second quarter.

The May jobs report due out on Friday is forecast to show the unemployment rate surged to 19.8%, smashing April's record 14.7%. Payrolls are expected to drop by 7.4 million, on top of the 20.5 million jobs lost the previous month.

In commodity markets, gold added 0.5% to $1,735 an ounce . [GOL/]

U.S.-China tensions weighed on oil prices. U.S. crude (CLc1) recently fell 2.14% to $34.73 per barrel and Brent (LCOc1) was at $37.62, down 0.58% on the day.

(Graphic: Global assets - http://tmsnrt.rs/2jvdmXl)

(Graphic: Global currencies vs. dollar - http://tmsnrt.rs/2egbfVh)

(Graphic: Emerging markets - http://tmsnrt.rs/2ihRugV)

(Graphic: MSCI All Country Wolrd Index Market Cap - http://tmsnrt.rs/2EmTD6j)

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

Latest comments

funny, the thumbs up icon only works for the commie.
The ECB is not the target of 0.1% inflation .... Deflation in Europe soon!
in the middle of a civil war, world war III just begun a great depression wait us but markets have a drink and celebrate a new all times high but beware the storm is coming
771 up for the Hang Seng today is very good.
i guess there are more virus hopes again
It's time to fight FED. It's fed up and not able to control the worlds stock market. Time to bet against it!
Why I don't see any news on Trump bringing in National Guard and Army getting ready? If China had brought in their army, chaos news would break out. What double standard we have.
give the rioters another trump's thousand dollars through money gun. It will help.
Why should Popeyes chicken being looted in Detroit effect Asia
https://www.yahoo.com/news/george-floyd-autopsy-shows-no-123131555.html
As Trump is keep pulling out from world organizations and separating with other countries, markets in other places should not have any impact to US market. Feels that Trump will soon exit from world security council as Russia and China are gaining more and more weight on world affairs.
Yahoo's titles have to be done by 3rd graders.
And Rueter's titles by 1st grade dropouts.
Speculation in this comment section. The S&P500 is +40% off the March 23 lows. The reason is simple; "institutions, dealers, and market makers" are no longer over-leveraged like they were at February highs. Gamma moved form negative, in March, to neutral in April and May. Now it's positive, and with positive gamma, that means this group in "quotes" are buying the dips and selling the rips. Simple market mechanics. Europe is improving too. Emerging markets have also moved off the lows these past few weeks. The FED will raise rates eventually to quell all of the money they've been printing  Yes we'll have inflation so gold will move higher. Been doing this successfully for over 33 years. By the way, read The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance by Eswar S. Prasad - there is no way the dollar collapses. Period.
Too many theories, everybody tries 2 b smart w their own. spare all from reading. In any free market: it is suplly n demand. That is all.
 - not theories my friend. And, you just proved my point.
Im talking about writers. Unless they write a science book, Their only intention is money. In a good book, i can pick out a few good points. Some books r just garbage.
Not really. Futures are down.Buy gold
The original title was down because of riots. It went up, they changed the title. It is down now. They’ll change it again.
down market = buying op. thanks Powell!
House of cards
All this rejoicing is like a drunkard trying to forget his woes.. and u know what happens next!
the retail investors will be holding the empty bags soon
Most states declare emergency and national guards r ready to move in to arrest looters. Expect protest will continue with less looting, burning n rioting.
War and Space I mentioned a few days ago as sectors for this decade. Little did I know it would be civil war. Far right against the far left. Everyone else getting crushed in the middle.
Biden n pelosi will figure it all out! 😜
I think the market will be ok now. Trump has no more firepower left. Just think...if he start a new trade war with China, China will Roar, and worldwide markets will crumble. We just wasted trillions to prop up the market, do you think he is stooo.pid enough to sink the market agian, then Fed as to do more print? I said no no not in China's house.
Give proof and examples that trump has no more firepower. If no proof, then you speculating. Speculating, as you know investing, is a failure idea...we waiting your answer.
Lol...proof was last Friday, he was not apply to do more tarriffs.
"we"
I think the market will be ok now. Trump has no more firepower left. Just think...if he start a new trade war with China, China will Roar, and worldwide markets will crumble. We just wasted trillions to prop up the market, do you think he is stupid enough to sink the market agian, then Fed as to do more print? I said no no not in China's house.
To much bears in the position thats why they can not drop it.
Globslist schmucks keep destroying small businesses. Notice how they did not loot and destroy Amazon warehouses with millions of dollars of goods. They did not sttack Google and Facebook headquarters. Instead they burn down mom and pop businesses.
Change your heading already. US futures recover with China mfg data and all Asian mkts up to the moon
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