FTSE bids adieu to miserable month of May

The FTSE has posted gains on Monday. Currently, the FTSE index is trading at 7,187, up 0.35% on the day. In economic news, the focus is on manufacturing releases. British Manufacturing PMI slowed to 49.4, missing expectations. Later on, the U.K. releases BRC Retail Sales Monitor, with an estimate of 0.9%. In the U.S., ISM Manufacturing PMI dropped to 52.1, short of the estimate of 53.0. On Tuesday, the U.K. releases Construction PMI.

May was a turbulent month for equity markets, as trade tensions soared between the U.S. and China, dashing hopes that a trade agreement was imminent. The blue-chip FTSE had a dismal May, falling 3.79%, its worst monthly performance in 2019. Aside from the U.S.-China spat, there could be more headwinds on the trade front. On Friday, U.S. President Trump shook up the markets with a threat to slap tariffs on all Mexican products, due to the illegal immigration crisis. Although Trump said that tariffs would be set at just 5%, investors were jarred by the news. The FTSE declined over 1.0%, a reminder that risk apprehension remains high, and the possibility of further U.S. tariffs could cause further volatility in the equity markets.

The focus was on manufacturing data on Monday, and the results were disappointing on both sides of the pond. In the U.K., manufacturing PMI dipped below the 50-level, which separates expansion from contraction. The PMI dropped to 49.4, marking the first contraction since July 2016. Manufacturing news in the U.S. also disappointed, as ISM Manufacturing PMI slowed to 52.1, down from 53.0 a month earlier. Global demand has fallen off trade tensions, and unless this situation improves, manufacturing sectors across the globe will remain under strong pressure.

Escalating Trade Feuds Keep Markets Nervous

Risk aversion continues into the new month

Dollar direction to be dictated by week’s events

Economic Calendar

Monday (June 3)

  • 4:30 British Manufacturing PMI. Estimate 52.5. Actual 49.4
  • 10:00 US ISM Manufacturing PMI. Estimate 53.0. Actual 52.1

Tuesday (June 4)

  • 4:30 British Construction PMI. Estimate 50.6

*All release times are DST

*Key events are in bold

FTSE, Monday, June 3 at 12:00 DST

Previous Close: 7,161 Open: 7,161 High: 7,193 Low: 7,079 Close: 7,187

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.