Global Markets Rally on Trade Deals, Fed Rate Cut Hopes, and Geopolitical Easing

Image Source : Krish Capital Pty Ltd

Index Update: S&P 500 and Nasdaq 100 futures pointed to record-high openings, with the Dow set to rise by 150 points, driven by optimism over a new U.S.–China trade agreement that eases tariffs and secures rare earth supplies. Additional progress with India and the removal of Section 899 tax further supported sentiment, boosting foreign investment prospects. Economic data is expected to show steady personal income and spending alongside a slight uptick in PCE inflation. Nike shares surged 10% on strong earnings, and tech stocks gained on improved risk appetite.

Market Movers: On Thursday, the top gainers were Cyngn Inc. (+171.46%), followed by Ascent Solar Technologies, Inc (+143.78%). On the contrary Altimmune, Inc (-53.18%) and CID HoldCo, Inc (- 46.96%) declined the most the same day.

Commodities Update: Oil prices rose for a third straight session, with WTI nearing $66 and Brent around $68 per barrel, though both remain headed for their worst weekly losses since March 2023. The market experienced high volatility amid geopolitical tensions—initially surging after U.S. strikes on Iranian sites, then easing following a ceasefire announcement. Mixed messages from President Trump on Iran sanctions and rising summer fuel demand in the U.S., along with low crude inventories and a weaker dollar, provided some support. Attention is now shifting to U.S.–China trade developments and the upcoming OPEC meeting.

Gold prices fell toward $3,280 per ounce, hitting a four-week low as demand for safe-haven assets weakened due to reduced geopolitical risks and improving trade sentiment. A finalized U.S.–China trade deal and signs of flexibility on upcoming tariffs have further eased investor concerns. Meanwhile, markets are watching for the PCE inflation report and potential Fed leadership changes that may impact interest rate expectations. Gold is on track for its second weekly decline.

Macro Update: The U.S. PCE price index is expected to rise by 0.1% month-over-month in May, matching April’s increase, with core PCE also projected to gain 0.1%. Year-over-year, headline PCE inflation is set to accelerate to 2.3%, while core PCE is seen edging up to 2.6%, signaling a slight uptick from recent lows. As the Fed’s preferred inflation gauge, these figures may influence the monetary policy outlook.

Dollar Commentary: The dollar index held near its lowest level since February 2022 after a four-day decline driven by growing expectations of Fed rate cuts. Fed Chair Powell's dovish remarks and weak economic data—including a 0.5% GDP contraction and rising jobless claims—reinforced the outlook for looser monetary policy. Speculation over President Trump’s upcoming Fed Chair nominee also added to the dovish sentiment, leading the dollar to hit multi-year lows against major currencies.

Bonds Commentary: The 10-year U.S. Treasury yield hovered near 4.26%, its lowest since early May, as expectations for deeper Fed rate cuts grew. Dovish signals from Fed Chair Powell and speculation over Trump’s upcoming Fed Chair nominee reinforced the outlook for looser policy. Markets now anticipate 64 basis points of cuts in 2025, up from 46 earlier, with attention turning to the PCE inflation report for further guidance.

Futures Update: U.S. stock futures moved higher, reflecting growing investor optimism fueled by a sustained ceasefire between Israel and Iran and signs of easing trade tensions. Markets were further lifted by news of a U.S.–China agreement to speed up rare earth shipments and the possibility of an extension to the current pause on tariffs. Major Wall Street indexes gained in the previous session, supported by improving geopolitical and trade developments.

Following a session with minimal movement, the stock saw a robust rally during Thursday’s trading day. The S&P 500 increased by 48.86 points, or 0.80%, ending at 6,141.01. From a technical analysis standpoint, the index secured support at the 20-period EMA and steadily moved higher, signaling the possibility of a short-term upward trend. Additionally, the 14-period RSI is trending upward, indicating sustained momentum for further buying and potential gains. The key support level is approximately 6,000, with resistance anticipated near 6,300.