Closing Recap 

U.S. stock futures point sharply lower to kick off June, as renewed global trade tensions (U.S.-China, Russia-Ukraine) spook investors after a strong May rally; oil and gold are surging on geopolitical concerns and a weaker dollar, while Treasury yields are modestly higher. 

Key Takeaways 

• Futures Slump on Trade/Geopolitical Fears: Equities indicate a significant negative open (S&P futures -0.45%, Nasdaq -0.62%) as June begins with a risk-off tone. 
• U.S.-China Tensions Flare: China accused the U.S. of violating their trade agreement and vowed to protect its interests, responding to President Trump’s stance. 
• Russia-Ukraine Conflict Escalates: Reports of ambitious Ukrainian attacks on Russian targets and high Russian drone activity add to geopolitical anxieties. 
• Strong May Rally Pauses: Markets pull back after impressive gains in May, where the S&P 500 had its best May since 1990 and the Nasdaq its best May since 1997. 
• Oil Surges: WTI crude jumps nearly 4% on geopolitical risks and an OPEC+ production hike that was less than some feared. 
• Gold Rallies: Gold prices climb over 1.6% as safe-haven demand increases and the U.S. dollar extends its recent decline. 
• Dollar Weakens Further: The U.S. Dollar Index (DXY) falls further, dipping below 99, with the Euro topping $1.14. 
• Global Markets Lower: Asian and European stock markets are broadly in the red. 

Market Overview 

U.S. equity markets are set for a sharply lower open on the first trading day of June, as a confluence of renewed global trade tensions and escalating geopolitical conflicts sours investor sentiment following an exceptionally strong performance in May. Last month saw major U.S. indices post their best gains since November 2023, driven by hopes of trade de-escalation and generally positive earnings. However, the new month begins with a distinct risk-off tone. 

Index (Futures)	Up/Down	% Change	Last
Dow	-133	-0.0031	42161
S&P 500	-26.25	-0.0045	5889
Nasdaq	-133.5	-0.0062	21243

Over the weekend and into Monday morning, tensions between the U.S. and China flared up again. Beijing responded to President Trump’s recent stance, accusing the U.S. of violating their trade agreement and vowing to protect its own interests. This development casts a shadow over the recent optimism surrounding a potential easing of the trade war. Simultaneously, the conflict between Russia and Ukraine has reportedly escalated, with Ukraine launching ambitious attacks on Russian targets and Russia responding with a high number of drone strikes. This geopolitical instability is providing another reason for investors to reduce risk exposure. 

The reaction in global markets has been clear. Asian indices, including Japan’s Nikkei and China’s Shanghai Composite, tumbled, and European bourses are also broadly lower. Commodity markets are reflecting the increased risk premium, with WTI crude oil surging nearly 4% due to geopolitical concerns and an OPEC+ production increase that was perhaps less aggressive than some market participants had feared. Gold prices are also rallying strongly as investors seek safe havens, aided by a continued decline in the U.S. dollar. Investors will now be watching key manufacturing PMI data releases today for further clues on the health of the global economy amidst these renewed pressures.

Economic Calendar

Today’s U.S. economic calendar features key manufacturing PMI data and construction spending. 

• 9:45 AM ET: S&P Global Manufacturing PMI (May-Final) 
• 10:00 AM ET: Construction Spending M/M for April 
• 10:00 AM ET: ISM Manufacturing PMI for May 
• Other Key Events: JP Morgan European Automotive Conference (London).
• China Caixin Manufacturing PMI for May (Released). 

Commodities, Currencies, and Treasuries 

Commodity prices are surging on geopolitical tensions and supply factors. WTI crude oil jumped $2.36 (+3.9%) to $63.15/bbl, and Brent crude also rose sharply. The gains are attributed to the flare-up in the Russia-Ukraine conflict, ongoing Middle East uncertainties, and an OPEC+ production increase that was viewed as not overly aggressive. Gold prices climbed $56.30 (+1.67%) to $3,371.70 per ounce, as investors sought safe-haven assets and the U.S. dollar extended its recent decline. The U.S. Dollar Index (DXY) fell -0.53% to 98.82, with the Euro trading above $1.14. The dollar weakened against the Japanese Yen as well. U.S. Treasury yields are modestly higher in early trading, with the 10-year yield up about 2 basis points to 4.436%, perhaps reflecting inflation concerns linked to higher commodity prices, despite the risk-off equity mood.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	2.36	USD/bbl	63.15
Brent	2.04	USD/bbl	64.84
Gold	56.3	USD/oz	3371.7
EUR/USD	0.0071	USD	1.1418
USD/JPY	-1.19	JPY	142.85
10-Year Note	0.018	%	0.04436

Looking Ahead 

The market will be heavily influenced by today’s manufacturing PMI data (S&P Global and ISM) for insights into the health of the U.S. factory sector amidst ongoing trade uncertainties. Developments in U.S.-China relations and the Russia-Ukraine conflict will remain critical drivers of sentiment. Later this week, the focus will shift to services sector PMIs and culminating in the May Nonfarm Payrolls report on Friday, which will provide a key update on the labor market. Earnings season continues, though with less intensity than in previous weeks.