Markets Rally on U.S.-China Tariff Deal as Risk Appetite Returns

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Index Update : U.S. stock futures surged after the U.S. and China agreed to a 90-day tariff reduction, boosting investor confidence and signaling a de-escalation in trade tensions. The rally followed a losing week for major indexes and marked a return to risk appetite. Markets now turn their focus to upcoming economic data, including CPI, PPI, retail sales, and industrial production, which could provide further insight into the trade war's economic impact.

Market Movers: On Friday, the top gainers were  nLIGHT, Inc (+32.98%), followed by Definitive Healthcare Corp (+29.18%). On the contrary 1-800-FLOWERS.COM, Inc. (-32.3%) and CVRx, Inc (-24.94%) declined the most the same day.

Commodities Update: Crude oil prices climbed to two-week highs, with WTI approaching $63 and Brent nearing $66 per barrel, following a major trade breakthrough between the U.S. and China. Both nations agreed to significantly lower tariffs for a 90-day period, easing tensions and boosting demand prospects for oil. However, gains were capped by bearish factors, including OPEC+ plans to ramp up production in the coming months and progress toward a U.S.-Iran nuclear deal, which could increase global oil supply. Gold prices dropped nearly 3% to a one-month low around $3,230 an ounce, as easing geopolitical tensions and improved investor sentiment reduced demand for safe-haven assets. The U.S.-China tariff rollback, coupled with a sustained ceasefire between India and Pakistan, signaled a shift toward de-escalation. Additional downward pressure came from the Fed’s recent comments highlighting inflation risks and ruling out immediate rate cuts.

Macro Update: The U.S. dollar index jumped over 1% to a four-week high above 101.5, fueled by renewed investor confidence after the U.S. and China agreed to a significant 90-day tariff reduction. The move eased trade tensions and boosted the appeal of U.S. assets, supported further by resilient economic data and the Fed’s cautious stance on interest rates. Markets now await key inflation and spending data to assess the trade deal’s economic impact.

Futures Update: U.S. stock futures surged following the announcement of a trade deal between the White House and China, with both countries agreeing to reduce tariffs. The agreement boosted investor confidence, driving strong gains across major indexes. The rally builds on recent positive momentum in the markets, supported by optimism around improved trade relations and increased appetite for risk assets.

After failing to sustain an upward move, stocks exhibited a lack of clear direction throughout Friday's trading session. The major averages moved back and forth across the unchanged line before ultimately closing mixed. The S&P 500 declined by 4.05 points, or 0.07%, finishing at 5,659.90. Technical analysis indicates that the price has shown resilience on every dip and is currently hovering near the neckline of a potential inverted head and shoulders formation. If the price breaks above these levels with strong volume, we could see fresh highs in the near term. Overall, the trend appears positive. The price is maintaining its 50-period exponential moving average, which further supports a bullish bias. Support is identified around 5,500, with resistance expected near 5,842.