Stock markets are sometimes accused of being detached from reality.
It’s happening at the moment. For while the United States is convulsed with the worst civil unrest in nearly three decades, its stock markets are continuing to tick higher, with the Nasdaq currently at its highest level since mid-February and the S&P 500 and the Dow Jones Industrial Average at their highest levels since early March.
In other words, to date, the riots which have swept American cities following the killing of George Floyd – an unarmed black man who died after a Minneapolis police officer knelt on his neck – appear not to be market-moving.
There are several reasons why.
The first is that investors are more fixated on the fact that the world’s economies are beginning to ease lockdown restrictions imposed to slow the spread of COVID-19. That is seen as positive for growth and for company earnings – the main factor which drives share prices.
The second is that, around the world, governments and central banks are unveiling extraordinary measures to stimulate their economies, including ultra-low or negative interest rates, tax cuts, tax breaks and loan schemes and, of course, asset purchase schemes. The latter, quantitative easing in the jargon, has already seen the US Federal Reserve expand its balance sheet to $6.7trn (£5.3trn).
These asset purchases help buoy the price of financial securities and underpin the market.
A third factor is that, to date, the riots do not appear to be having an impact on the US economy.
Bruno Verstraete, managing partner at asset managers Lakefield Partners in Switzerland, told Sky News: “So far we haven’t really seen any effect on the consumer [or on] consumer confidence. If any effect takes place, it will be because of that.
“If this derails and really becomes a global thing, or a US-wide thing, clearly consumer confidence is going to be affected and only then will investors start to worry.”
Mr Verstraete said there appeared to be echoes of events in 1968 when, despite cities like Chicago and Baltimore erupting following the assassination of the civil rights leader Martin Luther King, US stock markets rose.
He added: “There’s been a lot of looking back to 1968 where at this stage where it also happened – social unrest and markets going up. So I don’t think investors are too worried about it. They basically have no conscience so they don’t look at people killed on the streets, that’s not relevant [to them], it’s [company] results and the economy that talk.”
While investors have been able to ‘look through’ events on the streets of Minneapolis, St Louis, Washington and elsewhere, US business leaders have not. Far from it.
Numerous big US companies, including Cisco, Intel, Apple and Airbnb, have made cash donations to organisations such as the Black Lives Matter Foundation and the National Association for the Advancement of Coloured People.
One of the most striking interventions saw Bank of America, one of the largest lenders in the US, today commit $1bn (£800m) over four years to support small businesses owned by minority groups and to assist “people and communities of colour that have experienced a greater impact from the health crisis”.
Brian Moynihan, BoA’s chief executive, said: “The events of the past week have created a sense of true urgency that has arisen across our nation, particularly in view of the racial injustices we have seen in the communities where we work and live.”
Other chief executives have also demanded that US society becomes more inclusive.
Randall Stephenson, chief executive of telecoms giant AT&T, said companies needed to be pushing for change and speaking up for racial justice.
He told CNBC: “All of us CEOs have large African-American employee bodies. We owe it to them to make sure that we’re speaking to this, that we’re asking our policy makers to step up, that we’re asking our political leaders to step up and recognise and just say it: we’ve got a problem.
“We have a big problem and it needs to be dealt with. We as business leaders are going to need to put our shoulder into this.”
Meanwhile, Apple made public a letter sent to its employees by Tim Cook, its chief executive.
He wrote: “We’ve seen progress since the America I grew up in, but it is similarly true that communities of colour continue to endure discrimination and trauma.
“I have heard from so many of you that you feel afraid – afraid in your communities, afraid in your daily lives, and, most cruelly of all, afraid in your own skin. We can have no society worth celebrating unless we can guarantee freedom from fear for every person who gives this country their love, labor and life.”
Most dramatic of all have been the compelling reactions and statements from black business leaders.
Mark Mason, chief financial officer of Citi, published a moving blog on the banking giant’s website which began with the words ‘I can’t breathe’ – Mr Floyd’s last words – repeated 10 times.
He wrote: “Racism continues to be at the root of so much pain and ugliness in our society – from the streets of Minneapolis to the disparities inflicted by COVID-19. As long as that’s true, America’s twin ideals of freedom and equality will remain out of reach.”
Ken Frasier, the chief executive of US drugs giant Merck, told CNBC: “What the African American community sees in that videotape [of Mr Floyd’s death] is that this African American man, who could be me or any other African American man, is being treated as less than human.”
And Robert Smith, the billionaire founder of private equity firm Vista Equity Partners, recalled in a memo to employees how he was still pained by the killing of his uncle, nearly 50 years ago, by a white petrol station attendant.
He told them: “When I see the face of George Floyd…I see myself as a young man; I see the faces of my children; and I am reminded of the many times in my life when I have been judged not by my character, but by my skin colour.”