GLOBAL MARKETS-World equities edge higher despite U.S.-China tensions

By David Randall
NEW YORK, June 1 (Reuters) - World stocks hovered near
three-month highs and safe-haven government bonds inched lower
as signs that Europe's economic downturn has bottomed boosted
risk appetite, despite worries over violent protests in the
United States and unease over Washington's standoff with
Beijing.
President Donald Trump left a trade deal with China intact
Friday despite moving to end Washington's special treatment for
Hong Kong in retaliation for Beijing seeking to impose new
security legislation on the city. China has asked state-owned firms to halt purchases of
soybeans and pork from the United States in response, two people
familiar with the matter said. "The Trump rhetoric against China and trade impediments
against Hong Kong could have been a lot worse, hence the
performance of those markets this morning, which has helped the
risk backdrop," said Chris Bailey, European strategist at wealth
manager Raymond James.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.29% following broad gains in Asia and Europe. The index
.MIWD00000PUS is up more than 35% from its March lows.
In morning trading on Wall Street, the Dow Jones Industrial
Average .DJI fell 114.39 points, or 0.45%, to 25,268.72, the
S&P 500 .SPX lost 11.9 points, or 0.39%, to 3,032.41 and the
Nasdaq Composite .IXIC dropped 24.20 points, or 0.25%, to
9,465.68.
Signs of a rebound from the global coronavirus lockdown
helped bolster global equities and push safe haven assets lower.
France's manufacturing activity rose in May as the country began
to emerge from a nearly two-month coronavirus lockdown, pulling
the sector out of a nosedive that had seen activity hit a record
low a month earlier, a survey showed on Monday
An official business survey from China showed its factory
activity grew at a slower pace in May but momentum in the
services and construction sectors quickened.
Benchmark 10-year notes US10YT=RR last fell 10/32 in price
to yield 0.677%, from 0.644% late on Friday.
Bond investors suspect economies will need massive amounts
of central bank support long after they reopen and that is
keeping yields super low even as governments borrow much more.
"Current unemployment numbers go far beyond what has been
experienced in any post-war recession," Barclays economist
Christian Keller wrote in a note. "To the extent that some
sectors may never return to pre-pandemic business-as-usual."
A weekend of violent U.S. protests over race and policing
could present another setback for the economy which was only
just emerging from the steepest economic downturn since the
Great Depression
Following poor data on spending and trade out on Friday, the
Atlanta Federal Reserve estimated economic output could drop a
staggering 51% annualized in the second quarter.
The May jobs report due out on Friday is forecast to show
the unemployment rate surged to 19.8%, smashing April's record
14.7%. Payrolls are expected to drop by 7.4 million, on top of
the 20.5 million jobs lost the previous month.
In commodity markets, gold added 0.5% to $1,735 an ounce
XAU= . GOL/
Tensions between the U.S. and China weighed on oil prices.
U.S. crude CLc1 recently fell 2.73% to $34.52 per barrel and
Brent LCOc1 was at $37.70, down 0.37% on the day. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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