Morning Report – Tuesday 2nd June

Main Headlines

Donald Trump threatened to deploy the military if states and cities fail to deal with the unrest that’s wreaked havoc in the U.S. for a week. “I am dispatching thousands and thousands of heavily armed soldiers,” the president said in the Rose Garden as police clashed with demonstrators nearby. The comments came hours after he berated governors as “weak” and proposed 10-year jail terms for rioters.

U.S. cities braced for more chaos as New York City extended its curfew for a second night to tonight. The violence cast doubt on Chicago’s partial reopening planned for tomorrow, and Amazon shoppers snapped up pepper spray for self-defence. Joe Biden, in his first public campaign event in two months, met with black leaders, who challenged him to outline what he’d do as president to end economic disparity and fix the criminal justice system.

U.S. stock futures bucked gains for Asian equities and European contracts. A weaker yen helped boost Japanese shares. Treasuries were steady. Oil rose as the market waited to see if OPEC and its allies will extend record production curbs. Gold slipped.

Hopes for an extension of crude output cuts gained momentum after Trump discussed oil with Vladimir Putin. Moscow has promised to keep coordinating policy with Riyadh when OPEC+ meets in coming days, but hasn’t committed to prolonging the current agreement. After the presidents spoke, the Kremlin issued a statement praising the existing pact for “leading to a gradual recovery of oil demand and price stabilisation.”

The United Kingdom is expected to indicate its willingness to compromise on fisheries and trade rules if the European Union agrees to back off from its “maximalist” demands related to regulatory alignment and fishing access. A round of talks between the two sides will start today.

GBP

Boris Johnson will deliver a major speech this month on reviving the economy, while Chancellor Rishi Sunak will unveil plans to bolster growth after emergency fiscal support is withdrawn, people familiar said. Among topics under discussion are possibly raising income taxes or national insurance fees to pay for investment in the NHS. Business taxes may also rise, as internal polling suggests there is public support for such a move. The pound rose to a one month high against the dollar this morning as sentiment improves across global markets prompted by hopes for an economic recovery.

EUR

Angela Merkel will seek to broker a compromise today on a stimulus package worth as much as 100 billion euros to fund measures that may include everything from debt relief for cities to cash bonuses for consumers. Finance Minister Olaf Scholz also wants to extend a state wage support program. Among the most contentious topics will be a proposal to award cash grants to those who buy cars.

USD

The dollar was on the back foot on Tuesday as investors maintained their hope in a global economic recovery, despite growing concerns over U.S.-China tensions and mass protests across America over the death of a black man in police custody.

Main Economic Data/Central Banks/Government (All Times BST)

7:00 a.m.: U.K. May Nationwide house prices
8:00 a.m.: Spain May unemployment
9:30 a.m.: U.K. April Mortgage approvals

Corporate Events

Earnings include Zoom

Corporate Highlights

Zoom shares rallied significantly ahead of today’s quarterly earnings report, adding 2.7% in extended trading on top of yesterday’s 14% jump.