The S&P 500 futures are consolidating following worsening relationship between the U.S. and China. In response to China imposing a controversial national security law on Hong Kong, U.S. President Donald Trump announced that preferential trade treatment for Hong Kong would be ended. Trump also said sanctions would be imposed on Chinese and Hong Kong officials involved in eroding the city’s autonomy. Over the weekend, violent protests erupted in cities across the U.S. sparked by the death of George Floyd, an unarmed black man, in the hands of Minneapolis police in Minnesota state.
Later today, the Markit U.S. Manufacturing Purchasing Managers’ Index (May final reading, 40.0 expected) and the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (43.7 for May expected) will be reported.
European indices are consolidating after a very optimistic open as China is said to stop importing some US soybeans. Research firm Markit has published final readings of May Manufacturing PMI for the eurozone at 39.4 (vs 39.5 expected), for Germany at 40.7 (vs 36.8 expected), for France at 40.6 (vs 40.3 expected) and for the U.K. at 40.6 (vs 40.9 expected).
Asian indices closed in the green. Over the weekend, China’s official Manufacturing PMI fell to 50.6 in May (51.1 expected) from 50.8 in April, while non-manufacturing PMI climbed to 53.6 (53.5 expected) from 53.2 in April. This morning, government data showed that Japan’s first quarter capital spending increased 4.3% on year (-5.0% expected).
WTI Crude Oil Futures remain on the upside. OPEC+ alliance will discuss a short extension of its current production cut agreement, reported Bloomberg citing a delegate. Meanwhile, the number of U.S. oil rigs slid to 222 as of May 29 from 237 a week ago, according to Baker Hughes.
Gold gains ground as rising geopolitical tensions and US riots boosted demand for the safe-haven asset. Gold rose 0.28$ (+0.02%) to 1730.55.
The US dollar is weakening on hopes of economic recovery. EUR/USD rose 12pips to 1.1113 while GBP/USD gained 36pips to 1.2379.
US Equity Snapshot
Abbott Laboratories (ABT), a manufacturer of health care products, was downgraded to “sell” from “neutral” at Goldman Sachs.
Coty (COTY), a beauty company, and KKR (KKR), the buyout fund, have entered into a strategic transaction for Coty’s Professional and Retail Hair business, valuing the businesses at 4.3 billion dollars on a cash- and debt-free basis. KKR will own 60% of this separately managed entity and Coty will own the remaining 40%.
Separately, KKR, Cinven and Providence made an offer to acquire Spanish telecom operator, Masmovil Ibercom for 22.5 euros a share, a 20% premium over Masmovil closing price on May, 29th.
General Dynamics (GD), a defense company, has been awarded a contract from the US Army regarding the production and engineering services for Hydra-70 rocket systems. The contract is worth 3.42 billion dollars.