S&P 500 futures
declined by 0.44% to 6,221 points this week after opening with a gap set at 6,248 points, suggesting a likely return to last Friday’s closing
levels. Once again,the U.S.
President Donald Trump has triggered market unease by threatening to introduce new high tariffs on the EU and Mexico. On Saturday, he warned that unless trade deals are reached by August 1,
he will impose 30% tariffs on all imports from these countries. Both sides
responded by expressing readiness for all scenarios, while also voicing hopes
for a resolution. Markets seem to reflect this cautious optimism — the sell-off
was relatively mild, indicating that traders believe there is still time to
focus on upcoming macroeconomic and corporate events before any escalation
materialises.
The key macro event
this week is Tuesday’s release of June inflation data in the U.S. Wall Street
expects consumer prices to accelerate to 2.6% YoY
from 2.4%. If inflation does rise, the Federal Reserve will be left with no
room to cut interest rates at its July meeting. For a rate cut to remain
plausible, inflation would need to stay at or below 2.4%, a highly unlikely
scenario. Pressure is mounting on Fed Chair Jerome Powell,
with growing media speculation that he may consider stepping down early. Trump,
who has already succeeded in pushing through major tax cuts, appears eager to
remove any remaining roadblocks to further monetary stimulus. A well-timed rate
cut could delay a potential cyclical downturn, much like what occurred in 2016.
However, time is running out. If no cut is made in July, the next opportunity
will come at the September 17 Fed meeting.
Meanwhile, the U.S. Q2
corporate earnings season kicks off this week, led by banks. Reports are expected on Tuesday and Wednesday. Wall Street projects just 5.0% YoY earnings growth — the weakest since Q2 2023. Yet,
low expectations can be advantageous, providing room for upside surprises. This
could fuel positive momentum through the next month, though eventually the
issue of a market correction will resurface. A pullback of at least 5–7%
appears inevitable.
Additional key data includes Wednesday’s
release of the Producer Price Index and Thursday’s U.S. retail sales figures,
as well as Netflix earnings, which are seen as a bellwether for the broader
tech sector. Still, Tuesday’s
inflation data and bank results are poised to shape the week’s tone.
Investor sentiment has soured. The SPDR
S&P 500 ETF Trust (SPY) saw net outflows of $544.4 million, indicating that
large players are uneasy about trade risks, Powell’s uncertain position, and
the S&P 500’s proximity to the extreme target zone of 6,350–6,450 points.
From a technical perspective, the outlook for
the S&P 500 is unchanged. The
index remains just below resistance at 6,250–6,270 points. A sustained break above this level, which is a baseline scenario, would clear the path to the 6,350–6,370 range,
within the extreme target zone. Support lies at 6,150–6,170.
In the oil market, Brent crude remains near
the $67.00–$69.00 per barrel support zone. A firm breakdown has not occurred,
keeping hopes alive for a rebound toward $76.00–$78.00. OPEC+’s plan to raise
output by 548,000 barrels per day in August has had little effect, underscoring
market resilience. Still, if the support gives way, prices could slide further
to $57.00–$59.00.
Gold prices have yet to break below the
crucial $3,230–$3,250 support and have rebounded toward $3,330–$3,350, with the
current level now at $3,371. This confirms the ongoing summer consolidation
phase, likely to persist until mid-August. Only after that might a breakout
above the $3,250–$3,450 range develop. A deeper drop would require a close
below $3,230.
In currency markets, the U.S. Dollar continues
to recover. The EURUSD is likely to retreat further, targeting the
1.15000–1.15500 zone. The pair has already completed its upward trajectory by
reaching the 1.18000–1.19000 range, and at current levels near 1.16800, a more
pronounced downward move seems imminent.