Market Surge on U.S.-China Trade Truce; Investors Eye Inflation Data

Image Source : Krish Capital Pty Ltd

Index Update: Markets rallied strongly after the U.S. and China agreed to temporarily reduce tariffs, easing fears of a prolonged trade war and recession. The Dow jumped 2.81%, the S&P 500 rose 3.26%, and the Nasdaq surged 4.35%, led by major tech stocks such as Amazon, Meta, and Tesla.

Market Movers: On Monday, the top gainers were Fortrea Holdings Inc (+28.62%), followed by Five Below, Inc (+18.93%). On the contrary GIBO Holdings Limited (-16.48%) and Starz Entertainment Corp. (-6.73%) declined the most the same day.

Commodities Update: Oil prices climbed for a fourth consecutive session, with WTI reaching $62.4 and Brent hitting $65.3 per barrel, as hopes grew that the U.S.-China tariff reduction deal could ease trade tensions and support energy demand. However, uncertainty remains beyond the 90-day truce. Market focus has also turned to the Middle East, where President Trump's visit to Saudi Arabia comes amid OPEC's push to boost production and penalize non-compliant members. Despite the recent rebound, oil remains over 10% lower since early April due to prior tariff-related growth concerns.Gold rose above $3,250 per ounce following a sharp drop in the previous session, as investors reassessed the metal's haven appeal amid ongoing economic uncertainty. The recent U.S.-China trade truce had initially dampened demand for gold, but market participants are now focused on upcoming U.S. inflation and retail sales data, which could influence the Federal Reserve’s next move. Citi sees short-term consolidation in gold prices and has revised down its near-term price target.

Macro Update: U.S. inflation is expected to remain steady in April, with the annual CPI holding at 2.4% and core inflation at 2.8%, the lowest since 2021. On a monthly basis, CPI is forecast to rise 0.3% after a rare decline in March, likely due to recent tariff hikes. Core CPI is also projected to increase 0.3%, up from 0.1%. While markets will watch for early signs of tariff-driven inflation, the full impact may be delayed as businesses are cautious about passing on higher costs amid ongoing trade negotiations.

Futures Update: U.S. stock index futures declined after strong gains driven by news of a U.S.-China trade agreement, with investors now turning their attention to upcoming inflation data. Major Wall Street averages had previously surged on hopes that the trade truce between the two largest economies would help prevent a severe economic downturn.

Stocks experienced a sharp rally on Monday, completely reversing the modest declines from the previous week. This surge lifted the Nasdaq and S&P 500 to their highest closing levels in over two months. The S&P 500 increased by 184.30 points, or 3.26%, finishing at 5,844.20. Technical analysis indicates a positive short-term uptrend; however, following such a significant breakout, the market may consolidate to address potential price inefficiencies. The key moving averages are approaching a golden cross, supporting an overall bullish outlook. Support levels are identified around 5,755, with resistance expected near 5,977.