Europe Points To Mildly Positive Start On Recovery Optimism, Despite Rising US-Sino Tensions

European futures are holding onto the positive ground as US – Chinese relations return to the spotlight, threatening to overshadow optimism surrounding the global economic recovery as lockdown measures ease.

Charts (5)

Asian shares slipped lower overnight, although Europe futures are holding onto the positive ground as US – Chinese relations return to the spotlight, threatening to overshadow optimism surrounding the global economic recovery as lockdown measures ease.

Trump has promised a response by the end of the week to China’s manhandling of Hong Kong’s law and more broadly its crackdown on liberties in the financial hub. In turn China has threatened countermeasures against the US in the latest showing of escalating tensions between the two powers. The overriding concern here is that the cooling relations between the two largest economies could hamper the post coronavirus economic recovery.

Chinese factory profits fall less

Chinese data overnight is going some way to boost optimism. Profits at Chinese factories fell at a slower pace in April, aided by a pick-up in automobiles and electronics. Factory profits slipped by -4.3% in April, a huge improvement from March’s -35% decline.
These are tentative signs that China is reigniting its engine and demand is slowly returning. However, no quick bounce back is on the cards here. The damage caused by coronavirus to the economy is expected to keep the economy and businesses under pressure for the rest of the year. 

Inovio joins vaccine progress list

Vaccine news continues to offer support to sentiment. Inovio has become the latest to join the list of firms reporting progress in its efforts to find an immunization for COVID-19. Inovio joins Novavax, Moderna, Oxford University and others which are progressing towards a vaccine which would enable a rapid recovery to pre-virus levels

Dollar picks up off 18 day low

The mixed picture painted from vaccine optimism, from cautiously encouraging Chinese data and concerns over US -Chinese tensions is setting the scene for a mixed session. European and US futures are pointing to a mildly stronger start on the open. The US Dollar is pulling safe have bids, the traditional safe-haven gold is slipping lower for a third straight session, finding support at $1700.

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