U.S. stocks finished mostly higher on Friday after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.
The Dow ended the session slightly lower, but all three indexes rose for the week and registered a second straight month of gains. The S&P 500 added 17.8% for April and May, its biggest two-month percentage gain since 2009.
The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.
But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.
The Dow Jones Industrial Average .DJI fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 .SPX gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite .IXIC added 120.88 points, or 1.29%, to 9,489.87.
For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.
New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.
Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.
· Dow futures fall 200 points, with Wall Street set to give back some of May’s strong gains
U.S. stock futures fell on Sunday night as Wall Street was set to kick off June trading on a sour note after consecutive monthly gains.
Dow Jones Industrial Average futures traded 217 points lower, or 0.9%. S&P 500 and Nasdaq 100 futures slid 0.9% each.
Here’s what traders were monitoring heading into the new month:
Ø States continue to reopen their economies after the coronavirus pandemic forced the country to shutter nonessential businesses. The reopening is now taking place amid widespread protests across the U.S. over police brutality.
Ø Traders are also grappling with rising tensions between China and the U.S. President Donald Trump said Friday the U.S. would end its special treatment towards Hong Kong.
The announcement came after China had approved a national security bill that would increase the mainland’s power over the city. However, Wall Street breathed a sigh of relief as Trump did not say he would pull the U.S. out of the phase one trade deal reached earlier this year.
Ø Disappointing trial results from Pfizer for a breast cancer drug dampened market sentiment. The company made the announcement Friday evening, sending its stock down more than 6% in after-hours trading.
· European markets fall but still close out the month over 3% higher
European markets fell Friday as escalating tensions between the U.S. and China pushed back on the week’s positive sentiment amid the reopening of economies across the continent.
The pan-European Stoxx 600 provisionally closed down by 1.6%, but the index was still up over 3% since the start of May, on pace to register its second straight positive month following April’s more than 6% gain.
U.S. President Donald Trump is expected to hold a press conference Friday “on China” and markets are expecting a further souring of relations between the world’s foremost economic superpowers.
· Asia Pacific stocks trade mixed; China says its May factory activity expanded
Stocks in Asia Pacific were mixed in Monday morning trade as a Chinese data release over the weekend showed the country’s factory activity expanding in May.
In Japan, the Nikkei 225 added 0.56% as shares of index heavyweight and conglomerate Softbank Group jumped 2.07%. The Topix index also traded 0.3% higher.
South Korea’s Kospi rose 0.77%. Reuters reported Monday that the country’s exports in May fell 23.7% year-on-year. That was worse than expectations in a Reuters poll of a median drop of 22.1% year-on-year.
Meanwhile, shares in Australia declined, with the S&P/ASX 200 down 0.76%.
Overall, the MSCI Asia ex-Japan index traded 0.17% higher.
Investor focus on Monday will likely be on Chinese economic data for a better gauge of the state of the country’s economic recovery from the coronavirus pandemic.
Data released over the weekend by China’s National Bureau of Statistics showed factory activity in the country expanding in May, with the official manufacturing Purchasing Manager’s Index (PMI) coming in at 50.6. That was a decline from the 50.8 print in April and below the 51.0 level expected by analysts, according to Reuters. Still, the figure for May was above the 50 level, which separates expansion from contraction in PMI readings.
Looking ahead to Monday, a private survey of China’s manufacturing activity is expected to be released at 9:45 a.m. HK/SIN, when the Caixin/Markit manufacturing PMI is set to be out.
· Thailand's parliament approves $58 billion economic package to ease virus impact
Thailand’s parliament passed a 1.9 trillion baht ($58 billion) economic support package on Sunday to ease the impact of the coronavirus.
The legislation, comprising three bills, include a government plan to borrow 1 trillion baht and central bank measures worth another 900 billion baht in soft loans and support for corporate bonds.
Of the 1 trillion baht of borrowing, 600 billion baht will be for public heath works and relief measures, and the rest for rebuilding the economy and job creation.
Reference: Reuters, CNBC
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