Wall Street shakes off weak start to close higher

Stocks shook off a wobbly start on Wall Street and closed broadly higher on Monday (US time), adding to the market’s recent run of solid gains.

The S&P 500 climbed 0.4 per cent after wavering between small gains and losses in the early going. Banks, companies that depend on consumer spending and communications companies accounted for a big slice of the gains. Health care was the only sector to fall. Bond yields were mostly higher, another sign of optimism among traders. Oil prices fell.

Wall Street finished in the black on Monday.

Wall Street finished in the black on Monday.Credit:AP

The S&P 500 rose 11.42 points to 3,055.73. The Dow Jones Industrial Average gained 91.91 points, or 0.4 per cent, to 25,475.02. The Nasdaq composite climbed 62.18 points, or 0.7 per cent, to 9,552.05. Smaller company stocks had some of the biggest gains. The Russell 2000 index picked up 11.34 points, or 0.8 per cent, to 1,405.37.

The Australian sharemarket is poised to edge higher, with futures shortly before 7am AEST pointing to a gain of 9 points, or 0.2 per cent, at the open.

Dow futures slump Monday evening as Trump pledges military deployment if cities fail to quell civil unrest

U.S. stock-index futures headed lower in thin trading Monday evening as President Donald Trump said he would deploy military personnel across cities facing protests if state governors and local officials prove unable to contain civil unrest erupting across the nation. “I am dispatching thousands and thousands of heavily armed soldiers,” Trump said on Monday at the White House, according to news reports. “If a city or state refuses to take the actions necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them,” Trump said, at a news conference late Monday. Futures for the Dow Jones Industrial Average YMM20, -0.42% YM00, -0.42% were down 138 points, or 0.5%, at 25,327, those for the S&P 500 index ESM00 ESM20, -0.44% were off 0.5% at 3,039, while Nasdaq-100 futures NQ00, -0.18% NQM20, -0.18% were off 0.3% at 9.568. Major cities from Los Angeles to New York have been engulfed in nightly protests after George Floyd, a black man, died last Monday following a confrontation with police in Minneapolis in which a white police officer, Derek Chauvin, was captured on video driving his knee onto Floyd’s neck until the handcuffed man lost consciousness and later died. Curfews were announced Monday for Minneapolis and St. Paul, while New York’s Gov. Andrew Cuomo placed New York City under curfew Monday night, for the first time in about eight years. However, the stock market has mostly trended higher as optimists focus on efforts by businesses to emerge from lockdown protocols implemented to curtail the spread of COVID-19. The Dow DJIA, +0.36% finished regular trade on Tuesday 91.91 points, or 0.4%, higher at 25,475.02, after trading negative at the start of Monday’s session. The S&P 500 SPX, +0.37% rose 11.42 points, or 0.4%, to end at 3,055.73; while The Nasdaq Composite COMP) added 62.18 points, or 0.7%, to close at 9,552.05. All 50 states have embarked on some stage of reopening from forced shutdowns. Meanwhile, a report from the Congressional Budget Office released on Monday, said the recessionary atmosphere triggered by the coronavirus caused it to lower its 2020-30 forecast for U.S. economic output by almost $8 trillion, or 3% of gross domestic product, relative to its January projections. GDP isn’t expected to catch up to the previously forecast level until the fourth quarter of 2029, the CBO added. Investors have also been paying attention to rising Sino-American tensions, with Chinese government officials telling major state-run agricultural companies to pause purchases of some American farm goods, including pork and soybeans, according to reports.

May Market Wrap: Risks Remain But April's Rebound Continued Higher

The S&P 500 rose 4.53% in May, a solid gain after the index jumped 12.7% in April.

The two-month acceleration represents +17.8%, a performance not seen since the 18.7% gain in March-April 2009 after the market bottom during the Great Recession. More important perhaps, the rally that started in March 2009 mostly held for the next five years.

A successful recovery now and long-lived rally like the one in 2009 will depend on a number of factors:

All of which looks complicated. And it is.

Plus, those prerequisites have to work through the continuing trade battles between the United States and China.

As well, the U.S. elections this fall are almost certain to be divisive, especially on the heels of the protests and riots that erupted across the United States this weekend after the killing of Floyd George in Minneapolis last week.

Any of these issues could derail the rally with dramatic selloffs like those that routinely occurred as the Trump administration attempted to negotiate the first phase of a trade deal with China.

But, on the upside for investors, market technicals suggest stocks are not overvalued as they were in January and February. The NASDAQ, NASDAQ 100 and NASDAQ Biotechnology Index (NBI) are ahead on the year and could reach new highs, perhaps this week.

The May market performance was different from the April rally that produced the best one-month gains for the S&P 500 and the Dow since 1987.

In addition to the S&P 500 gains, the Dow (INDU) added 4.26% for the month, compared with 11.1% in April. The NASDAQ Composite (NDX) was up 6.75%, down from 15.5% the month previous. The NASDAQ 100, which is dominated by big tech stocks, added 6.17%.

April’s rally was heavily influenced by gains in big tech shares, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Netflix (NASDAQ:NFLX).

May’s move higher had more to do with star performances in other sectors of the market, especially biotechs.

Biotechnology stocks jumped more than 8% after investors wanted in on the hunt for a coronavirus vaccine as well as cures for other diseases, especially cancers.

Shares of Novavax (NASDAQ:NVAX), a small Maryland biotech, jumped 154% on the hopes that its coronavirus candidate could be a winner. The release by Moderna (NASDAQ:MRNA), a clinical stage biotech based in Cambridge, Massachusetts of some early but positive results pushed its stock up to as high as $87 and set off a 912-point Dow rally.

Though the shares fell back to $61.50, they’re still up 33.7% for the month.

Also working on vaccines are big pharma stalwarts Merck (NYSE:MRK), Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE). Shares of Gilead Sciences (NASDAQ:GILD) have been volatile as studies continue using its drug remdesivir to treat the disease.

The S&P 400 Midcap Index (MID) and Russell 2000 also saw gains: 7.1% for the mid-cap benchmark and 6.36% for the Russell.

Homebuilding and real estate shares moved on data showing home prices are holding steady in many markets. KB Home (NYSE:KBH) jumped 26% during the month. PulteGroup (NYSE:PHM), Lennar (NYSE:LEN) and DR Horton (NYSE:DHI) had similar gains.

Airline shares plunged in April but showed signs of stabilization in May.

Alaska Airline Group (NYSE:ALK), down nearly 44% in April, saw a 5% gain in May. The reason: loosening stay-at-home orders mean people will start to travel again. Passenger counts have collapsed in the pandemic.

Boeing (NYSE:BA) attracted some investor interest, from those who believe the company’s order book will fill up again as the economy starts to recover. Shares of the aviation giant rose 3.4% after a 5.4% decline in April. Still, they’re down 55% on the year. 

Some of the big April winners had so-so performances in May. Amazon, for example, gained 26.9% in April. However, in May, after hitting a 52-week high of $2,525.45, the shares actually dropped 1.28%.

Tesla (NASDAQ:TSLA) jumped 49% in April as the company reported good first quarter results. But the stock was up just 6.8% in May. The shares are still up 99.6% for the year.

Finally, crude oil prices jumped substantially during the month after a near-panic in some markets in April. West Texas Intermediate crude finished May up 88% at $35.49 a barrel.  U.K. Brent crude rose 42.9% to $37.84.

Energy stocks, on the other hand, seemed muddled. Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) showed small losses. Apache (NYSE:APA) fell 17.5% after gaining 213% in April. Oil-services giant Halliburton (NYSE:HAL) was up 11.9% but is off 52% for the year.

The big worry now is that many small energy companies will not survive these prices.

Read More Here...

Thai Stock Market Expected To Be Rangebound On Monday

The Thai stock market moved higher again on Friday, one day after it had ended the three-day winning streak in which it had gathered more than 40 points or 3 percent. The Stock Exchange of Thailand now rests just above the 1,340-point plateau and it’s expected to hold steady in that neighborhood again on Monday.

The global forecast for the Asian markets is mildly positive, largely on optimism over trade. The European markets were down and the U.S. markets were mostly higher and the Asian bourses are tipped to follow the latter lead.

The SET finished modestly higher on Friday following gains from the technology and cement stocks, while the financials were mixed and the energy producers were soft.

For the day, the index rose 5.34 points or 0.40 percent to finish at 1,342.85 after trading between 1,323.12 and 1,342.88. Volume was 19.118 billion shares worth 96.186 billion baht. There were 804 decliners and 512 gainer, with 356 stocks finishing unchanged.

Among the actives, Advanced Info jumped 1.58 percent, while Thailand Airport climbed 1.22 percent, Asset World shed 0.84 percent, Banpu plummeted 11.35 percent, Bangkok Bank lost 0.46 percent, Bangkok Dusit Medical soared 3.21 percent, Charoen Pokphand Foods gathered 1.61 percent, Krung Thai Bank dropped 0.95 percent, PTT Exploration and Production fell 0.30 percent, Siam Commercial Bank skidded 1.00 percent, Siam Concrete accelerated 3.00 percent, TMB Bank gained 0.88 percent and PTT, PTT Global Chemical, Kasikornbank, Bangkok Expressway and BTS Group all were unchanged.

The lead from Wall Street is cautiously optimistic as stocks showed wild swings on Friday before eventually ending the session mostly higher.

The Dow eased 17.53 points or 0.07 percent to finish at 25,283.11, while the NASDAQ jumped 120.88 points or 1.29 percent to 9,489.88 and the S&P 500 rose 14.58 points or 0.48 percent to 3,044.31. For the holiday-shortened week, the Dow spiked 3.8 percent, the NASDAQ jumped 1.8 percent and the S&P soared 3 percent.

The major averages moved to the upside late in the session as traders reacted positively to President Donald Trump’s highly anticipated press conference about China. Trump lashed out at China in his brief remarks, but traders seemed relieved that he did not announce new tariffs or a withdrawal from the phase one trade agreement.

Trump also revealed that he is terminating the U.S. relationship with the World Health Organization, claiming China has total control of the agency.

In economic news, the Commerce Department saw an unexpected and substantial increase in U.S. personal income in April, as well as a steep drop in personal spending due to the impact of the coronavirus-induced lockdown.

Crude oil prices moved higher on Friday, on hopes of a pickup in energy demand and expectations that major oil producers will extend output cuts beyond this month. West Texas Intermediate crude oil futures for July ended up $1.78 or 5.3 percent at $35.49 a barrel.

Closer to home, Thailand will provide April figures for unemployment and retail sales later today. The jobless rate expected to rise to 1.1 percent from 1.0 percent in March, while sales are expected to fall 0.5 percent on year after rising 0.4 percent in the previous month.

For comments and feedback contact: editorial@rttnews.com

Dow futures fall Sunday evening after weekend of violent protests amid coronavirus pandemic

U.S. stock-index futures headed south in thin trading Sunday evening following a weekend of violent protests over the death of a black man, George Floyd, early last week in Minneapolis while in policy custody. The protests, spanning from Los Angeles to New York, resulted in violent clashes between civilians and law enforcement, and led some to speculate that it could complicate efforts by cities and states to recover from one of the worst public health disasters in more than century. “The indirect impact on the fragile collective psyche of businesses and consumers could be more serious,” Mark Zandi, chief economist of Moody’s Analytics, told MarketWatch. “Just when people were starting to come out of the proverbial bunkers, the protests may be too much for them, and they will go back in,” he speculated, referencing consumers reluctance to go out shopping in the wake of the viral outbreak. “The protests are also symptomatic of just how deep the economic problems and racial tensions go in our country,” the economist said. Although the riots, fueled by deep-seeded concerns about racial injustice in America, aren’t expected to have long-term economic implications, protests did slam the stores of major retailers owned by Target Corp. TGT, +3.29%, Walmart Inc. WMT, +0.29% and Nike Inc. NKE, +0.37%, which are still swooning from the pandemic and were caught up in looting and vandalism that ensued during the weekend protests. Apple Inc. AAPL, -0.09% also said it would close some of its stores due to looting fears. Futures for the Dow Jones Industrial Average YMM20, -0.00% YM00, -0.00% were off 160 points, or 0.6%, at 25,217, those for the S&P 500 index ESM20, -0.10% ES00, -0.10% were 0.6% lower at 3,023.75, while Nasdaq-100 futures NQM20, -0.39% NQ00, -0.39% were 0.6% lower at 9,507.75. The protests across many major cities in the U.S. center on the death of Floyd, who is black, and perished on Monday following a confrontation with police in Minneapolis in which one officer, Derek Chauvin, was captured on videos driving his knee on Floyd’s neck until the handcuffed man lost consciousness and later died. To be sure, investors will be focused on the continued reopening of states and local businesses following lockdowns intended to halt the spread of the deadly illness derived from the novel strain of coronavirus. Intensifying conflicts Sino-American friction may also influence trading. On Friday, the Dow DJIA, -0.06% booked a weekly gain of 3.8%, while the S&P 500 SPX, +0.48% finished 3% higher and the Nasdaq Composite Index COMP, +1.29% ended the period 1.8% higher. For May, the Dow logged a 4.3% gain, the S&P 500 climbed 4.5%, while the Nasdaq marked a 6.8% return in May.

Dow Jones Industrial Average Fell as Trump May Be Winding Up to Hit China – Barron's

Stocks gave up gains and slumped late in the day after President Trump announced he would be holding a Friday press conference on China.

U.S. stocks fell late Thursday, giving up gains that had held up through most of the afternoon. The market was spooked by President Donald Trump’s comments that he’ll hold a news conference on China on Friday. Investors worried about increasing tension between Beijing and Washington.

The Dow Jones Industrial Average dropped 147.63 points, or 0.58%, to close at 25400.64. The S&P 500 slipped 6.40 points, or 0.21%, to finish at 3029.73, and the Nasdaq Composite fell 43.37 points, or 0.46%, to close at 9368.99.

Another 2.1 million Americans filed for unemployment insurance last week, down from numbers a week before but slightly worse than what economists had expected. This marks the eighth straight week of fewer people filing for unemployment. Still, since late March, more than 40 million people have sought unemployment benefits from the government, as the coronavirus pandemic forced many businesses to shut down and workers to lose jobs.

As expected, China’s National People’s Congress approved a new national-security law that would tighten Beijing’s control over Hong Kong, where relative economic and social freedom under the “one country, two systems” framework has allowed the city to serve as a global trade and financial hub. On Thursday, the governments of the U.S., Australia, Canada, and the U.K. issued a joint statement, reiterating their “deep concern” regarding Beijing’s decision.

Hong Kong is not the only sore spot between China and the U.S. The Trump administration has been criticizing Beijing’s handling of the coronavirus pandemic, human rights abuses against Muslim minorities, as well as China’s stealing of U.S. technology and unfair trade practices.

Editor’s Choice

Investors will be closely watching what President Trump has to say at tomorrow’s press conference about China.

Trump is also locked into battle with social-media companies at home. After Twitter (ticker: TWTR) labeled two of his tweets about mail-in voting as needed to be fact-checked, the president vowed to respond.

On Thursday Trump signed an executive order intended to strip legal protections provided to social-media companies under current federal law. The move will likely to face immediate and extensive legal challenges from the companies it targets.

The issue will also likely draw a line between two of the major competitors in the social-media world. Facebook (FB) founder and CEO Mark Zuckerberg said in an interview that private-sector companies probably shouldn’t be the “arbiter[s] of truth” of everything that people say online. Twitter CEO Jack Dorsey claims the company’s intention is to display conflicting information in dispute so people can judge for themselves.

Write to Evie Liu at evie.liu@barrons.com

Here is How Hedge Funds Traded Genesis Energy, L.P. (GEL) During The Crash

In this article you are going to find out whether hedge funds think Genesis Energy, L.P. (NYSE:GEL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Genesis Energy, L.P. (NYSE:GEL) has seen an increase in enthusiasm from smart money in recent months. GEL was in 4 hedge funds’ portfolios at the end of March. There were 1 hedge funds in our database with GEL holdings at the end of the previous quarter. Our calculations also showed that GEL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
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Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Xiniya Earnings Call Transcript XNY 2014 Q3

New York Stock Exchange

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the fresh hedge fund action surrounding Genesis Energy, L.P. (NYSE:GEL).

What does smart money think about Genesis Energy, L.P. (NYSE:GEL)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 300% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GEL over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the most valuable position in Genesis Energy, L.P. (NYSE:GEL), worth close to $3.9 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Warren Lammert’s Granite Point Capital, and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Granite Point Capital allocated the biggest weight to Genesis Energy, L.P. (NYSE:GEL), around 0.4% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to GEL.

As aggregate interest increased, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in Genesis Energy, L.P. (NYSE:GEL). Marshall Wace LLP had $2.3 million invested in the company at the end of the quarter. Warren Lammert’s Granite Point Capital also made a $0.7 million investment in the stock during the quarter. The only other fund with a brand new GEL position is Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Genesis Energy, L.P. (NYSE:GEL) but similarly valued. These stocks are B. Riley Financial, Inc. (NASDAQ:RILY), Vectrus Inc (NYSE:VEC), Kala Pharmaceuticals, Inc. (NASDAQ:KALA), and Bain Capital Specialty Finance, Inc. (NYSE:BCSF). This group of stocks’ market caps are closest to GEL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RILY 14 71858 -2
VEC 15 55085 2
KALA 18 183294 8
BCSF 8 13111 0
Average 13.75 80837 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $7 million in GEL’s case. Kala Pharmaceuticals, Inc. (NASDAQ:KALA) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Genesis Energy, L.P. (NYSE:GEL) is even less popular than BCSF. Hedge funds clearly dropped the ball on GEL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on GEL as the stock returned 109.8% so far in the second quarter and outperformed the market by an even larger margin.

Follow Genesis Energy Lp (NYSE:GEL)

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Disclosure: None. This article was originally published at Insider Monkey.

Why is the U.S. stock market ignoring a brewing crisis in Hong Kong?

President Trump’s forceful anti-China speech Friday was the latest volley in a deepening conflict between the U.S. and China that have brought relations to possibly the lowest point since the normalization in 1979 and could serve as a prelude to Sino-American disputes taking center stage for markets once again, investors and analysts say.

The president endorsed legislation in Congress that could bar Chinese companies from raising money in public U.S. markets, would sanction Chinese officials involved in a crackdown on ethnic minorities in its Xinjiang region, and said that his administration “would being the process of eliminating policy exemptions” that treat Hong Kong differently from mainland China.

Read more: Revoking Hong Kong’s special status is Trump’s ‘nuclear option’ that could trigger irrevocable U.S.-China split, analysts warn

In stark contrast to dynamics in 2019 when equity prices would often move sharply on mere rumors about U.S.-China trade relations, markets on Friday barely registered these developments, suggesting that investors are preoccupied with the unique circumstances surrounding the coronavirus pandemic and prospects for economic recovery boosted by government and central bank financial rescue plans.

“Most risk assets are being driven by stimulus only,” Jeroen Blokland, multi-asset portfolio manager at Robeco told MarketWatch, pointing to the recent proposal of a €750 billion fiscal stimulus proposal by the European Commission, on top of the roughly $3 trillion relief package approved by U.S. lawmakers in the past two months — with indications that there will be more to come. “As long as this continues, there seems to be little to stop markets from going up.”

The U.S. stock market was buoyant in May, with the Dow Jones Industrial Average DJIA, -0.06% rising 4.3%, the S&P 500 index SPX, +0.48% adding 4.5%, while the Nasdaq Composite Index COMP, +1.29% gained 6.8%.

Some of those gains were notched in the past week, even as China’s National People’s Congress passed legislation that could greatly curtail democratic freedoms in Hong Kong, and the U.S. State Department declared the special administrative region “no longer autonomous”, potentially setting the stage for higher tariffs on Hong Kong imports and complicating business for hundreds of U.S. companies with regional headquarters there.

Another reason financial markets are taking these events in stride is that “so far the tensions between the U.S. and China are largely geopolitical and they’re less economic or trade related,” said Michael Arone, chief investment strategist for State Street Global Advisors.

Indeed, White House economic advisor, Larry Kudlow, told Fox News last week that while the president was “miffed” with Beijing, the trade deal reached between Washington and Beijing in January remains intact and the president made no mention of it in his speech on Friday.

However, one market where tensions are manifest is foreign exchange, as the Chinese yuan has hit is cheapest level relative to the U.S. dollar since the Sino-American trade conflict reached its most intense in September of 2019.

MarketWatch

While China manages its currency, it does so based in part on market signals and in part on “signals it wants to send,” according to Robin Brooks, chief economist at the Institute of International Finance. There are two important Chinese yuan exchange rates: the market for offshore yuan and the “fix” wherein Chinese policy makers dictate a U.S. dollar-exchange rate and allow it to float within 2% of that number.

“The fix has been weakening and is basically at an all-time high,” Brooks said. “The move looks like a signal that these mounting tensions with the United States are bad news economically and the yuan is weakening in response.”

The danger is that weakness in China’s currency may foreshadow a weakening global economy and global financial market instability, including a fall in the U.S. stock market, Brooks said, noting that previous episodes of yuan weakening have been accompanied by weaker global growth and market volatility, most recently in 2015.

“Any sustained move weaker in the yuan would really be something that would upset markets, upset emerging markets and the S&P 500,” he added.

It may just take time for equity market investors to wake up to what foreign exchange markets are indicating, said Boris Schlossberg, managing director of FX strategy at BK Asset Management. “Eventually as the post lock-down stimulus wears off, the market is going to focus on actual growth and fundamentals, and that’s when U.S.-China tensions come in,” he said.

“It’s very clear that the U.S. and China are at irreconcilable loggerheads” on issues ranging from intellectual property, sovereignty in the South China Sea, and control over advanced information technology, he added. “The market’s attitude is that it’s just words, they wouldn’t be so stupid as to sabotage the global economy over seemingly political points, but that’s a naive point of view.”

Markets will therefore eventually start paying closer attention to the relationship, especially as the Trump administration gets more specific in terms of sanctions against Chinese officials and companies and changes to the U.S. relationship with Hong Kong.

In the immediate week ahead, markets may continue to focus more on the economic impact of the coronavirus pandemic though, with readings on the U.S. manufacturing and services sectors for the month of May due on Monday and Thursday, respectively, from the Institution of Supply Management.

Other U.S. data economic data on tap include numbers on April construction spending Monday, factory orders on Thursday, and figures on new claims for unemployment due on Thursday. The closely watched monthly non-farm payrolls and unemployment report due Friday will also give investors a snapshot of the degree to which the labor market has rebounded in May.

A handful of companies will report earnings in the coming week, including Dow component Nike Inc. NKE, +0.37%, and Broadcom Inc. AVGO, +2.87% on Thursday and Zoom Video Communications Inc. ZM, +9.74% on Monday.