Dow Futures Edge Lower As Protests Over the Death of George Floyd Rage In Several US Cities

The most significant U.S. protests since 1968 are keeping investors cautious Monday, even as data from China's powerful manufacturing economy boosts global stocks as the coronavirus pandemic wanes.

The Monday Market Minute

  • Global stocks mixed as China data, softer Trump stance on Hong Kong lifts Asia, while US protests hold down gains on Wall Street.
  • National Guard troops are called into 15 US states to quell the worst rioting on domestic soil since 1968 following the death of George Floyd in police custody in Minneapolis on May 25.
  • Oil prices steady as OPEC mulls bringing its next meeting forward by one week, to June 4, in a move that could signal an extension of production cuts from the cartel.
  • Manufacturing data shows modest improvements in Europe, while China sees expansion even as export orders fall, indicating a slow but steady return to growth as the coronavirus pandemic wanes.
  • U.S. equity futures suggest a modestly weaker open ahead of a light week for economic data releases that will be capped by Friday's May jobs report, which could lift the headline unemployment rate to as high as 20%.

U.S. equity futures edged lower Monday as investors kicked off the first week of the trading month in a cautious mood amid violent domestic protests over the death of an African American man by police in Minnesota and data indicating slow but steady improvement in China's manufacturing economy.

Protests over the death of George Floyd, who was killed by a Minneapolis police officer on May 25, have raged for most of the weekend in several U.S. cities, with National Guard troops called in to at least 15 states around the country and curfews in at least a dozen major metropolitan areas.

The disruption is likely to complicate the government's effort to re-start the domestic economy as the coronvirus pandemic begins to wane, and may further delay the next wave of Congressional support as lawmakers spar over the origin and nature of the most significant domestic protests since 1968.

“The mobs are devastating the life’s work of good people and destroying their dreams,” President Donald Trump said Saturday during a statement to mark the launch of the first manned NASA rocket launch in nearly a decade.

“There will be no anarchy ... civilization must be cherished, defended and protected," he added. "The voices of law-abiding citizens must be heard, and heard very loudly."

Wall Street futures were holding up well, however, given both the breadth of the protests and the rising U.S.-China tensions, which peaked last week with a statement from President Donald Trump that indicated he would remove Hong Kong's special legal status now that Beijing was moving to tighten its grip over security on the semi-autonomous island.

Trump did not, however, signal that any U.S. sanctions would disrupt the current Phase 1 trade agreement between the world's two biggest economies, and with data showing expansion in China's manufacturing sector -- despite a sharp decline in export orders -- stocks in Asia, as well as in Europe, helped draw a line under pre-market trading losses on Wall Street.

Futures contracts tied to the Dow Jones Industrial Average suggest a 25 point fall for the 30-stock average, which gained 4.26% last month, while those linked to the S&P 500 suggest a modest 5 pullback for the broader benchmark. 

Oil prices were little-changed in overnight trading, but holding up against the better-than-expected China factory data and reports that OPEC members could move their next meeting to June 4, a signal that suggests the cartel, along with non-member allies such as Russia, is ready to extend or deepen its current production cut agreement that is taking 9.7 million barrels from the market each day.

WTI contracts for July delivery were marked 22 cents lower from their Friday close in New York and changing hands at $35.32 per barrel while Brent contracts for August, the new global benchmark, were seen 6 cents lower at $37.78 per barrel.

European stocks kicked-off the month of June with modest gains across the board, led by a 1% gain for the FTSE 100, although gains were clipped by a 1.65% decline for the DAX performance index in Frankfurt as data showed Gemany's manufacturing activity slumped further in May.

Asia stocks, however, showed solid gains thanks in part to Trump's easier-than-expected stance on Hong Kong security and China's factory PMI data, which showed expansion for the month in both private and official surveys. 

Japan's Nikkei 225 ended the session 0.84% higher at 22,062.39 points while the region-wide MSCI ex-Japan benchmark was seen 2.3% higher, thanks to solid gains in Shanghai and Seoul, heading into the final hours of trading.