Wall St rises as recovery hopes offset US protests, China tensions

Andrew Cummings
June 2, 2020

US stocks closed moderately higher on Monday as traders appeared to have shrugged off tensions with China over Hong Kong and continuing street riots in the USA - while pinning their hopes on a quick reopening of the economy.

Washington, Los Angeles and Houston were among the cities that imposed night-time curfews following a wave of demonstrations across the United States in reaction to the shocking death last week of an unarmed black man, George Floyd, at the hands of police in Minneapolis.

The Dow Jones industrial average rose as much as 93.12 points, or 0.3 percent, to 25,476.23, after shedding 0.5 percent at the open.

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, chief of investment research at Nationwide.

Investors also shrugged off China's Monday threat of retaliation against President Trump's move to start ending the US's special trade relationship with Hong Kong after Beijing moved to restrict the territory's autonomy.

The Institute for Supply Management said on Monday that its index of national factory activity edged up to 43.1 in May from 41.5 in April, which itself was an 11-year low.

U.S. WTI crude oil -2.5% to $34.60/bbl.

May Purchasing Managers Index (PMI) data pointed to fragile but encouraging rebound in global manufacturing - driving hopes that the worst is over.

Tensions between the two nations have climbed again in recent weeks with US officials expressing anger over how China handled the coronavirus outbreak.

But markets have taken solace in the signs that rising US-China tensions do not threaten a trade detente between the two countries.

Some 40 million Americans have lost jobs since mid March and many states are emerging from lockdowns, even as daily new case numbers are only very slowly trending downward.

"At the levels we're at, I wouldn't be surprised to see the market take a pause and pull back", Hogan added. Hackett added, however, that valuations are at their highest levels in almost two decades, suggesting "markets are due for a breather following an unprecedented rally". Risk assets shrugged off reports that Chinese officials had told agricultural companies to pause purchases of some USA farm goods, threatening a hard-won trade deal.

In South Korea, the Kospi rose 1.8%, while Japan's Nikkei 225 rose 0.8%.

Australia's S&P/ASX 200 Index futures were up 0.2%.

The U.S. labor market report on Friday will probably show American unemployment soared to 19.6% in May, the highest since the 1930s.

In commodity markets, gold added 0.5% to $1,735 an ounce.

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