Investing.com - Here are the top five things you need to know in financial markets on Monday, June 3:
1. Risk aversion escalates amid trade threats
Global stocks and commodities fell on Monday while safe-haven demand bid up prices for sovereign debt, as escalating trade tensions and new tariff threats exacerbated worries over a possible global slowdown.
Read more: Expanded Trade War, Plunging Yields Will Keep Rattling Markets - Pinchas Cohen
Dow futures pointed to a nearly 100-point drop at the open while the yield on the U.S. 10-year Treasury fell to its lowest level since September 2017, moving closer to 2.0% and widening the curve inversion with the 3-month note. The yield on the German 10-year equivalent fell to a record low of -0.22% on Monday.
In the ongoing Sino-U.S. trade dispute, China increased the pressure by accusing Washington of “intimidation and coercion” and dubbed U.S. demands as “exorbitant”. Beijing also opened an investigation into FedEx (NYSE:FDX) after Huawei said the delivery company diverted to the United States two packages intended for the company's offices in China.
With U.S. President Donald Trump’s plans to place tariffs on all imports from Mexico to the U.S. well underway, a senior Mexican delegation was set to begin high level talks on Monday in Washington.
Broadening the scope of trade tensions, The New York Times reported that White House trade advisers had urged the imposition of tariffs on Australian aluminum, whose exports to the U.S. have surged over the last year.
Trump meanwhile traveled to the U.K. on Monday for his first official state visit after urging Britain to “walk away” from negotiations with the European Union if it could not get a “fair deal” on Brexit, its departure from the economic bloc.
2. Global manufacturing activity in contraction ahead of U.S. ISM
Adding to concerns of a potential global recession, recent data showed that manufacturing activity is in contraction on a global level.
The manufacturing PMIs, which monitor factory activity, were below the 50-point mark separating contraction from expansion in Japan, South Korea, Malaysia and Taiwan.
The Caixin/Markit Manufacturing purchasing managers' index (PMI) showed modest expansion in China at 50.2, although the official government gauge on Friday showed contraction.
For the U.S., the Institute of Supply Management will release its manufacturing PMI at 10:00 AM ET (14:00 GMT) Monday. Economists expect the gauge to remain in expansion with a slight uptick to 53.0 after April’s reading hit its lowest level since 2016.
3. Apple preps for WWDC
Apple Inc (NASDAQ:AAPL) will kick off its Worldwide Developers Conference (WWDC) at 1:00 PM ET (17:00 GMT) on Monday, June 3, with a stage presentation by the company’s executives.
WWDC, which focuses on software, tends to be one of the two biggest events along with the iPhone/Apple Watch event in the fall.
Among multitudinous rumors, Apple is expected to present iOS 13 which a Bloomberg report suggested could have new, faster animations for the multitasking interface and for closing apps, along with improvements to the iPad and updates to Apple-made apps.
4. Boeing warns of defective parts
Boeing (NYSE:BA) announced on Sunday that some of its 737 planes could have defective parts on their wings.
Working with the Federal Aviation Administration (FAA), the company contacted airlines that use the 737 to inform them that they should inspect the slat track assemblies due to “potential nonconformance” that could require replacement.
The FAA indicated that the part failure would not bring down the plane, but could damage the aircraft while in flight.
The part issue struggles as Boeing struggles to get its 737 MAX back in service after two fatal accidents caused the airplane to be grounded across the world.
The International Air Transport Association announced Monday that it plans to hold a meeting on June 26 with carriers, aircraft manufacturers and regulators to discuss preparation of a unified message on the 737 MAX’s return to service.
5. Google slumps after network congestion caused outage
Shares in Alphabet (NASDAQ:GOOGL) fell more than 3% in premarket trade after its Google unit experienced high levels of congestion in the eastern U.S. brought down several of its services, including Google Cloud, G Suite and YouTube, on Sunday.
Google later said it had identified the root cause and resolved the issue, without providing specific details.
SnapChat, product of parent company Snap Inc . (NYSE:SNAP), also experienced user issues with speculation on its outage pointing to its use of Google Cloud.