U.S. Stock Futures Surge as Trump Delays Tariffs on EU

U.S. Stock Futures Surge as Trump Delays Tariffs on EU

U.S. stock futures are experiencing notable gains in a holiday-shortened session this Monday, following President Donald Trump's decision to postpone the implementation of a 50% tariff on goods imported from the European Union until July 9. This strategic move has alleviated immediate trade tensions that had weighed heavily on the markets in the previous week.

Despite cash equity markets being closed in observance of Memorial Day, the robust activity in futures trading signals a renewed appetite for risk, setting an optimistic tone as traders prepare for Tuesday's market opening. Major futures have shown significant increases: the S&P 500 futures have risen by 1.3% to 5,892, Nasdaq-100 futures are up 1.45% to 21,278, and Dow futures have gained 1.14%, reaching 42,151.

This upturn comes in the aftermath of a tariff-induced downturn last Friday when all three major indexes experienced declines – the S&P 500 fell by 0.67%, the Dow dropped by 0.61%, and the Nasdaq slid 1%. European markets also reacted positively to the tariff delay, with the Stoxx Europe 600 index reversing its previous decline to rise by 0.7%. Additionally, the euro has touched a one-month high, while gold prices have seen a slight retreat from a two-week peak as safe-haven investments wane.

A particularly significant event on the horizon is Nvidia's (NVDA) announcement of first-quarter earnings later this week, which is expected to be a critical determinant of market direction. After a remarkable rally of 16% leading up to last week, Nvidia's stock has since fallen by 3% due to concerns over lost revenue in China stemming from U.S. export restrictions on chips. Analysts from Bank of America predict a modest earnings beat but caution investors about potential volatility in guidance due to a substantial $5.5 billion write-down, likely resulting in gross margins decreasing to 58% from the previously forecasted 71%. Investors will be keenly looking for indicators of recovery in China regarding compliant chips and updates on Nvidia's Blackwell platform.

Meanwhile, Apple Inc. (AAPL) continues to face pressures, having recorded an eighth consecutive day of losses on Friday, closing down 3% and totaling an 8% decline for the month of May. The looming 25% tariff on overseas imports of iPhones introduces additional uncertainty. While analysts retain a favorable long-term perspective based on the strength of Apple's ecosystem, they are wary of risks associated with the company’s positioning in artificial intelligence. The upcoming Worldwide Developers Conference (WWDC) on June 9 is poised to be another pivotal moment for Apple.

Gold has taken a step back from Friday’s rally; however, it nevertheless remains well-supported by ongoing policy uncertainties and a weakening dollar. In light of recent movements, Citi has revised its short-term gold target upward to $3,500 per ounce. Although U.S. Treasuries are closed for the holiday, attention is expected to center on yields and inflation expectations leading up to this Friday's Personal Consumption Expenditures (PCE) report.

Technical analysis of the futures indicates that S&P 500 futures are striving to reclaim the 200-day moving average at 5,890.25. Surpassing this mark could catalyze further upward momentum towards the main top at 5,993.50, while a failure in this regard would risk a sharp decline to the next significant target at the 50-day moving average of $5,619.70.

Additionally, Nasdaq-100 futures have successfully remained above the critical 200-day simple moving average (SMA) at 20,774.81, suggesting a phase of short-covering. If buying momentum carries into Tuesday, it may lead to strong movement towards the recent peak at 21,562.25. Similarly, Dow futures are attempting to capitalize on a technical rebound after testing the 50-day moving average at 42,230.80 on Friday. The uptick observed today, albeit on thin trading volume, indicates potential short-covering activity, and sustained upside momentum may push futures toward the 200-day moving average at 43,087.

While Trump’s decision to delay tariffs has temporarily stabilized the markets, attentions will swiftly shift to Nvidia's earnings report and Friday’s inflation figures. As trade-sensitive sectors and major cap industries navigate these evolving circumstances, the potential for market volatility remains high. A consistent breach above key resistance levels in major indexes would firmly establish a renewed sense of bullish sentiment.