Morning Minutes 6/1/2020

Morning Minutes

Manufacturing, Trade and Unrest In Focus

June 1, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

June begins with mixed trading around world markets coming off a weekend where the headlines were dominated by continuing protests and riots in the US, and China indicating its intent to cut back on purchases of US agricultural goods as US-China relations turn frostier. In this environment, and while waiting for a number of key economic announcements, US index futures are essentially flat this morning.

Overseas, Asia Pacific markets soared to start the month with Hong Kong gaining 3.3%, Shanghai surging 2.2% and Tokyo climbing 0.8%, as the privately collected China Caixin Manufacturing PMI report crossed back into expansion territory, rising to 50.7 and beating he 49.6 street estimate. In Europe today, Milan, Paris and London are all up 1.0%-1.1% while Frankfurt is down 1.6%. Manufacturing PMI reports from Europe were mixed with Italy (38.3 vs previous 38.0) and Spain (45.4 vs previous 31.1) showing improvement, while Germany (36.6 vs previous 36.8) and the UK (40.7 vs previous 40.6) flatlined.

It’s a big day for North American economic news. Canadian manufacturing PMI is due at 9:30 am EDT which was 33.0 last month. At 10:00 am, US ISM Manufacturing PMI for May (street 43.0 vs previous 41.5), is due along with US construction spending for April (-6.0% vs previous 0.9%). In the ISM report, investors may also look at some of the components including employment (street 35.0 vs previous 27.5) and new orders (street 40.3 vs previous 27.1).

More potentially significant economic developments are due later in the week. The Bank of Canada meets on Wednesday but with the central bank transitioning from outgoing Governor Poloz to incoming Governor Macklem, it may not do anything this time except hint toward the future. Also on Wednesday, service PMI reports from around the world and US ADP payrolls are due. Thursday brings trade reports for the US and Canada plus weekly jobless claims. Friday brings the monthly US Nonfarm Payrolls and Canada Labour Force Survey reports. It’s a light week for corporate earnings.

 

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