S&P 500 broad market index futures
declined by 0.60% to 5,870 points, falling below the primary upside target
range of 5,940–6,040 and reaching key support at 5,840–5,860 points. From this
level, the market could either begin a corrective move toward the 5,550–5,650
range or attempt a rebound to retest the 6,040 resistance. At present, there is
insufficient evidence to favor one direction over the other.
Despite an almost flawless U.S. corporate
earnings season, investor attention has shifted toward broader developments. On
Friday, the U.S. federal appeals court reinstated President Donald Trump’s
proposed tariffs, overturning an earlier decision by the Court of International
Trade to block them. The market reaction to the news was mixed; while tariffs
are inherently negative for risk sentiment, a perceived paralysis of the
executive branch could be seen as even worse. A neutral stance may have been
expected, but Trump escalated tensions further by accusing China of violating
trade agreements and promising tighter restrictions on semiconductor exports.
Earlier in the spring, markets had been buoyed
by hopes for a trade deal by August. Those hopes helped the S&P 500 recover
much of its 19% drop seen in March–April. But recent developments are casting
doubt over that timeline. Trump, likely emboldened by a market rebound and
rising approval ratings, now appears to be hardening his negotiating stance.
Meanwhile, macroeconomic indicators continue
to influence investor sentiment. Monday will bring U.S. manufacturing PMI data,
which is broadly expected to be positive. The Atlanta Fed’s latest GDPNow
estimate signals a sharp acceleration in Q2 growth to 3.8% YoY from 2.2%,
reducing the likelihood of interest rate cuts. Wednesday will feature the ADP
Nonfarm Payrolls report, with consensus expectations for an increase to 110,000
new jobs from 62,000 in April. The same day will also deliver services PMI
readings, which are anticipated to be upbeat. On Thursday, the European Central
Bank is expected to cut rates by another quarter-point, though forward guidance
will be crucial. Any hints at a pause in rate cuts would likely support the
Euro.
The week concludes with Friday’s release of
official U.S. Nonfarm Payrolls data, expected to be stronger than the ADP
figures. Wall Street anticipates an increase of 130,000 jobs in May, with
unemployment holding steady at 4.2%. If confirmed, this would reinforce
expectations of continued economic resilience despite trade tensions.
Large investor positioning has notably
improved. The SPDR S&P 500 ETF Trust (SPY) reported that net outflows have
dropped significantly to just $540 million, reflecting a positive reaction to
the earlier cancellation of tariffs. However, investor sentiment may shift
again depending on how markets digest Friday’s reinstatement of those tariffs
and Trump’s renewed criticisms of China.
Technically, the S&P 500’s outlook has
deteriorated slightly. Although futures remain within an uptrend and reached
their initial target of 5,940–6,040, the recent drop to 5,840–5,860 support is
a warning sign. A sustained move below this support would likely trigger a
broader downtrend with a target zone of 5,550–5,650. Conversely, a rebound
above 5,940 and a successful test of 6,040 would revive bullish momentum and
activate a scenario targeting the extreme upside range of 6,300–6,400 points.
Oil markets remain technically bearish. Brent
crude prices are hovering around $65.70 per barrel, having corrected from the
$67.00–69.00 resistance zone. Over the weekend, OPEC+ confirmed plans to raise
output in July by 411,000 barrels per day. Immediate support remains at
$57.00–59.00, although medium-term prospects for a rally towards the
$75.00–77.00 resistance zone remain intact.
Gold prices are rebounding in response to
renewed tariff uncertainty and Trump’s latest remarks. Prices are currently
testing resistance at $3,330–3,350, trading around $3,347 per ounce. A failure
to break above this level would likely lead to a pullback to the $3,230–3,250
support zone. Despite the recent bounce, downside risks remain high, with the
baseline scenario still pointing to a decline towards $3,030–3,050.
In currency markets, the U.S. Dollar continues
to weaken, and the EURUSD pair has surged by 0.78% to 1.14360. Rising
U.S.-China tensions have reignited buying interest in the Euro, which has now
broken above its previous primary upside target of 1.12500–1.13500. This
breakout activates a bullish scenario for a move toward a fresh multi-year high
above the November 2021 peak of 1.15730.