S&P 500 broad market index futures are
rising by 4.7% to 5,928 points this week, the highest level since 3 March. The
March pullback has been fully reversed, leaving the benchmark just 3.4% below its
all-time high of 6,147 points. The index is now trading above the extreme
target of 5,900, indicating a potential extension of the current rally towards
new primary targets in the 6,150–6,250 range. This extension could be confirmed
either by a successful retest of the 5,900 level or continued upward movement.
The United States and China agreed to lower
tariffs for the next 90 days - down to 30% on imports from China and 10% on
U.S. exports to China. Meanwhile, U.S. inflation in April unexpectedly declined
to 2.3% YoY. This positive momentum was further supported by falling producer
prices, which eased to 2.4% YoY from 3.4%, and an uptick in retail sales to
0.1% MoM from 0.0%. The Atlanta Fed’s GDPNow model now forecasts U.S. economic
growth of 2.5% in the second quarter.
Despite these encouraging signs, Federal
Reserve Chair Jerome Powell remained cautious, warning of inflationary risks
driven by tariffs. “We may be entering a period of more frequent, and
potentially more persistent, supply shocks—a difficult challenge for the
economy and for central banks,” Powell stated. Consequently, the Fed is
unlikely to alter its position on tariffs or interest rates in the near term.
More comments from Fed officials are expected next week, which may provide
further clarity.
Investor sentiment has improved amid easing
inflation. The SPDR S&P 500 ETF Trust (SPY) recorded $0.5 billion in net
inflows this week after four weeks of consistent profit-taking. Investors are
now buying aggressively near the cycle’s highs.
From a technical standpoint, the S&P 500’s
outlook has become less sustainable. The index has broken above the extreme
5,800–5,900 resistance zone. If it can hold above this range, the rally may
stretch towards the 6,150–6,250 target area. The nearest resistance lies at
5,880–5,900, with additional resistance at 5,980–6,000. Initial support is
found at 5,780–5,800.
Brent crude oil prices approached resistance
at $67–69 per barrel but have since retreated to $64.65 amid progress in
U.S.–Iran negotiations. The nearest support is at $57–59. Ongoing U.S.–China
trade discussions may support prices in the coming months, potentially driving
them towards $75–77 per barrel.
Gold has entered a significant correction
after reaching a record high of $3,499 per troy ounce. Prices pulled back to
the $3,130–3,150 support zone and attempted a rebound to $3,230–3,250, but
momentum quickly faded. If prices fall below $3,130, a decline to $3,000
becomes a likely scenario.
The U.S. Dollar is pulling back after a strong
rally, with EURUSD recovering to 1.1190 amid reduced trade tensions. Having
reached its primary downside target of 1.1050–1.1150, the pair may be set for a
deeper correction. While medium-term targets remain at 1.0500–1.0600, weaker
U.S. economic data could limit further gains for the Greenback.