Market Commentary: Tuesday 3rd June

China’s manufacturing sector had its worst slump since September 2022, with the Caixin PMI falling to 48.3 last month from 50.4 in April. Higher US tariffs are taking a toll on smaller exporters. Investors are keeping a close eye on how the US-China trade saga plays out, as the White House seeks to arrange a call between Trump and Xi to ease tensions.

The BoJ is expected to announce its bond purchasing plans for April 2026 onwards at its upcoming meeting. Governor Kazuo Ueda hinted that the BoJ may continue to slow JGB purchases for the next financial year.

Data-wise, we have Eurozone CPI at 11:00 a.m. and US JOLTS Job Openings at 4:00 p.m. The market expects Eurozone inflation to have decelerated last month (0.0% MoM expected vs. 0.6% prior), bolstering the case for the ECB to cut rates by 25 bps later this week.

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