Protests Over U.S Racism Move Further Beyond U.S Borders. Should the Markets Worry?

The impoverished and the subdued have found a voice and an audience in recent weeks. George Floyd’s unlawful killing by a police officer looks to be the straw that broke the camel’s back.

From a timing perspective, the U.S was just coming out of the COVID-19 lockdown. Fears amongst pretty much every community over what lies ahead have been redirected to an unyielding call for change.

When considering the sheer number of such events, many would argue that it was only a matter of time. Economic pressures will have contributed to the widespread rioting. Not just in the U.S, but also across the EU and other nations.

The wealth gap minority has something to fight about and people should stand up and listen.

No jobs mean nothing to lose and that is not a good thing for governments looking to restore peace and economic prosperity for that minority.

Last week, economic data from the U.S caught the markets by surprise. Few had anticipated a rise in nonfarm payrolls, let alone a fall in the U.S unemployment rate.

Should the civil unrest persist, the U.S President’s hopes of a speedy economic rebound may well vanish.

Consumer confidence and spending will be impacted by this civil unrest and that’s before considering social distancing and the threat of a 2^nd wave across the U.S.

Economic Data

This week, there’s very little on the economic data front to give the markets a guide of how the economy has performed in early June.

Thursday’s initial jobless claims and prelim June economic sentiment figures, due out on Friday, will be the first.

Last Friday’s labor market numbers should support a pickup in consumer sentiment. There should also be a far lower rise in jobless claims.

That is assuming, of course, that the easing of lockdown measures and a return to BAU takes a normal path.

The civil unrest may test that theory, however.

The Global Financial Markets

In spite of the demonstrations and riots across the U.S, and beyond, the markets have been able to forge ahead.

There’s another negative to consider.

As lockdown measures ease, the world’s largest blue-chip firms continue to flood the news wires. Reopening for business may be positive, but sizeable layoffs amidst the highly charged political environment are not…

The aviation industry is amongst sectors that have had to respond to the change in the new norm…

Ironically, the minority that benefits from the direction of the global financial markets, and equity markets, in particular, will be delighted by the news. After all, margins will hold as companies cut workforces to deliver that ROI for shareholders…

That is, of course, assuming that this civil unrest does not become something far more sinister and economically debilitating.

Keeping a track of the news wires and events globally will be as important as the economic calendar. At least until there is calm. When that materializes, however, remains to be seen…

Will the FED think the same? It would be quite a swipe at Trump and the Republicans.

At the time of writing, the EUR was up by just 0.05% to $1.12947 against the Greenback.