Stocks under pressure as Trump promises to end violent protests

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NEW YORK (Reuters) – Asian stocks were under pressure Tuesday after Wall Street futures fell as US President Donald Trump vowed to use force to end violent protests in American cities, causing a previously optimistic market mood.

FILE PHOTO: Passers-by wearing protective masks after a coronavirus epidemic (COVID-19) are reflected on a screen displaying stock prices outside a brokerage house in Tokyo, Japan, March 17, 2020. REUTERS / Issei Kato

E-mini futures for the S&P 500 fell 0.38% and Japanese Nikkei 225 futures fell 0.34%. Australian S & P / ASX 200 futures rose 0.15% early in the session.

The first indications came after the close of the main American stock market indices with gains of around 0.5% and continued to hover near three-month highs.

As Trump spoke at the White House’s Rose Garden on Monday, live television footage showed police firing tear gas to dissipate protesters in Lafayette Park across the street.

“If American consumers were reluctant to get out of their COVID-19 locking cocoon fearing a secondary spreader, they are unlikely to feel safer with the Military Humvees descending Pennsylvania Avenue,” wrote Stephen Innes, strategist in head of global markets at AxiCorp, in a note to clients.

As Asian markets prepared to open, dozens of cities across the United States were under curfew with the National Guard deployed to 23 states and to Washington, D.C.

Curfews followed protests over the death of George Floyd, a 46-year-old African American who died in Minneapolis after being trapped under the knee of a white police officer for almost nine minutes.

The dollar index fell 0.4% as appetite for risk rose, optimistic about the worst global economic slowdown caused by the coronavirus.

The biggest concern for the bond markets was the increase in US government debt, with the benchmark 10-year Treasury bond yield falling to 0.677% from 0.644% on Friday.

“Most investors say that (the protests) are not going to destroy the economy,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “It is a roadblock, but it is not as important as a pandemic.”

The protests were peaceful on Sunday but turned violent in the evening. US President Donald Trump on Monday urged state governors to quell protests against racial inequality that has engulfed major cities in the country as authorities extend curfews to prevent a seventh night of looting and vandalism.

Markets were buoyed by US manufacturing activity, which edged up from the 11-year low in May. The report was the strongest sign to date that the worst of the economic slowdown has passed with the reopening of businesses, although recovery from the COVID-19 crisis may take years due to high unemployment.

Likewise, in the euro area, the IHS Markit manufacturing purchasing managers’ index rebounded slightly in May from April’s record low, although factory activity continued to contract sharply.

Oil futures stabilized on Monday despite US-China trade tensions with Brent up 1.3% to $ 38.32 a barrel and US crude slipping from 5 cents to 35, $ 44 per barrel.

Spot gold added 0.8% to $ 1,739.75 an ounce. US gold futures gained 0.03% to $ 1,737.40 an ounce.

In the trade dispute, sources in China said the government had told them to stop buying US soybeans after Trump decided to end the special treatment for Hong Kong to punish Beijing for its new security laws for the city.

Although investors are closely monitoring the news about advances in pandemic medicine, markets have taken precedence over mixed news from Gilead Sciences Inc., whose stocks have fallen about 4%. Gilead said his antiviral drug remdesivir offered modest benefit to patients with moderate COVID-19 after five days of treatment, while those who received the drug for 10 days in the study did not as well out.

David Henry reports in New York; Editing by Sam Holmes

Our standards:Principles of the Thomson Reuters Trust.

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