S&P 500 broad market index futures surged
by 2.9% this week to 5,826 points, marking the highest level since 6 March.
This rally has erased April’s 14% decline and nearly recovered the 5.7% retreat
seen in March. The benchmark is now just 5.4% away from its all-time high of
6,147 points. Extreme upside targets in the 5,800–5,900 range have already been
reached and may stretch to 5,850–5,950 in June. Although a 2–4% pullback is
typically expected before further gains, a continued rise above these levels is
possible given the deep April correction. This opens the door to new upside
targets at 6,150–6,250 points. A similar scenario recently played out in gold,
although that rally was followed by a significant correction.
Markets were buoyed by news of the first trade
agreement between the United States and the United Kingdom, followed by a
positive first round of talks with China. U.S. Treasury Secretary Scott Bessent
announced a 90-day trade truce, including a reduction in U.S. tariffs on
Chinese imports to 30% from 145%, and a corresponding 10% cut in Chinese
tariffs on U.S. goods.
Investors are now focused on the release of
U.S. April Consumer Price Index (CPI) data on Tuesday, which will be the first
key indicator reflecting the economic impact of lower tariffs. Monthly
inflationary pressure is expected to rise, while annual inflation is forecast
to hold steady at 2.4% year-on-year. Any deviation from these expectations
could weigh on markets, especially in light of the Federal Reserve's continued
hawkish tone. Fed Chair Jerome Powell last week highlighted uncertainty around
inflation drivers, particularly regarding the role of tariffs. “It’s really not
at all clear what it is we should do,” he said. Powell is due to speak again on
Thursday after the CPI release. A stronger-than-expected inflation reading
could reinforce negative sentiment, while weaker data may undermine his hawkish
stance.
Meanwhile, large investors continue to take
profits. The SPDR S&P 500 ETF Trust (SPY) recorded $3.4 billion in net
outflows last week, significantly reducing the $16.1 billion in upside bets
placed during April when the S&P 500 averaged around 5,000 points.
From a technical perspective, the S&P 500
outlook has become more complex. The index is currently trading near the lower
boundary of the extreme target zone. Resistance levels are seen at 5,780–5,800
and 5,880–5,900 points. A sustained breakout above these levels could validate
an extended upside move to 6,150–6,250. The nearest support lies at 5,680–5,700
points.
Brent crude oil prices failed to break above
resistance at $67–69 per barrel, retreating to $57–59 support after OPEC+
confirmed a production increase of 411,000 barrels per day starting in June.
The pullback is also linked to signs of a slowdown in the U.S. economy.
However, ongoing U.S.–China trade talks are expected to provide support,
potentially pushing prices towards $75–77 per barrel in the coming months.
Gold has entered a significant correction
after peaking at $3,499 per troy ounce on safe-haven demand. Prices retreated
to $3,200 and attempted a rebound to $3,250–3,280, but failed to sustain
momentum. A drop to $3,000 per ounce remains a likely scenario.
The U.S. Dollar continues to strengthen, with
EURUSD falling to 1.11300 amid easing trade tensions between the U.S. and
China. Having reached its primary downside target of 1.10500–1.11500, the pair
appears poised for a deeper correction. Medium-term targets are projected in
the 1.05000–1.06000 range.