US/China Trade Optimism
US stocks are trading a little lower ahead of the open today. This follows a sharp move higher yesterday as traders welcomed news that the US and China agreed to a 90-day window of reduced tariffs to allow for continued negotiation on trade. Both sides agreed to reduce a broad basket of tariffs down to the 10% level from the previous 125% mark. The move has been taken as a sign that both countries are committed to working out terms to put an end to the trade war which has rattled markets over the last month.
Goldman Cuts Recession Risks
Indeed, the prospect of an end to the trade war is having serious implications for the US outlook. Goldman Sachs this week revised higher its 2025 US GDP target, cutting recession risks down to 35% from 45% prior to the tariffs reductions. The bank has also shifted its view on rates, now forecasting the Fed to cut just once this year, down sharply from the prior forecast of 3 cuts.
US Inflation Due
Looking ahead today, traders will be watching the latest US inflation data. Annualised CPI is expected to hold steady at 2.4%. Any upside surprise in the data could see equities coming under fresh pressure as traders further scale back their Fed easing expectations. Market pricing has shifted considerably recently with traders pegging September for a cut from June previously, then July.
Technical Views
S&P 500
The rally in the S&P is stalling for now just ahead of the 5,932.75 level. However, with momentum studies bullish, focus is on a continuation higher while prices holds above the 5,721.25 level with a move back up to the YTD highs the main objective for bulls near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.