North American stocks slip, oil falls as US-China tensions escalate

02 Juin, 2020, 03:38 | Auteur: Auguste Feret
  • Financials help boost S&P/TSX composite, U.S. stock markets mixed

Asian stocks looked set to follow USA shares higher Tuesday as investors focused on signs of economic recovery over further tension with China and spreading protests in America.

Meanwhile, the U.S.is also facing a wave of civil unrest as demonstrators take to the streets to protest the killing of George Floyd by Minneapolis police, which has prompted some American cities to implement curfews.

The Dow closed up 91 points, while the S&P 500 climbed almost 0.4% and the Nasdaq added more than 0.6%.

Monday's volume on the New York Stock Exchange totaled 4.17 billion shares with 2,236 issues advancing, 50 setting new highs, and 739 declining, with five setting new lows.

"Equity markets continue to display remarkable resilience in the face of a constant barrage of troubling developments, with investors continuing to focus on the positive signs of reopening", said Mark Hackett, the chief of investment research at Nationwide.

Market sentiment was also weighed down by increasing hostility between the USA and China after President Donald Trump said he would revoke Hong Kong's special trade status in response to Beijing's controversial new security law for the city-state.

But economic data boosted investor sentiment, with the Institute for Supply Management's (ISM) purchasing managers' index (PMI) showing the contraction of factory activity was slowing.

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The July crude contract was down US$1.01 at US$34.48 per barrel and the July natural gas contract was down eight cents at US$1.77 per mmBTU.

"Nothing that has happened since the market closed on Friday has been market positive", said Art Hogan, a market strategist at National Securities.

The results from two surveys of purchasing managers at USA manufacturers will be disclosed at 9:45 a.m. ET and at 10 a.m. However, if protests begin to develop further and spiral out of control potentially leading to viral transmission of Covid-19, then we may see a different reaction in markets.

More than 6 million cases of coronavirus have been confirmed around the world, including more than 1.7 million in the U.S.

"Investors are continuing to largely ignore the escalating US-China tensions, the global recession and ongoing riots in the US, among other risks", said analyst Fawad Razaqzada at trading site ThinkMarkets.

The broad-based S&P 500 added 0.2 per cent at 3,051.69 while the tech-rich Nasdaq Composite Index gained 0.5 per cent to 9,534.87. MSCI Asia ex-Japan index jumped more than 2% supported by a 2.5% rally in Shenzhen stocks, while Australia's ASX and South Korea's Kospi were more than 1% higher. Gold futures edged down 0.06%.

In Europe, London added 1.5 percent by the close, Madrid gained 1.8 percent, Milan rose 1.8 percent and Paris added 1.4 percent, while Frankfurt was shut for a holiday.

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