U.S. stock futures fell sharply on Monday,
with S&P 500 futures down 1.3% to 5,226 points as markets reopened
following the Easter break. While European exchanges remain closed for the
holiday, U.S. markets face mounting pressure amid renewed political
interference in monetary policy.
President Donald Trump once again rattled
investors by openly criticising Federal Reserve Chair Jerome Powell, calling
for immediate interest rate cuts and raising the prospect of Powell’s
dismissal. The move has drawn comparisons to central bank upheaval in countries
like Turkey, where political intervention has fuelled financial instability and
currency market chaos.
Despite the turmoil in equities and further
weakness in the U.S. Dollar, the bond market remained relatively stable,
suggesting easing tensions in the ongoing trade conflict with China. The Trump
administration has claimed progress in trade talks with Japan and other Asian
nations. Trump also characterised the trajectory of U.S.-China trade relations
as "positive," despite Beijing's warning of retaliatory measures
against countries supporting trade curbs on China.
The macroeconomic calendar is relatively light
this week, with U.S. April PMI data the only major release. Consensus points to
further economic cooling, which could weigh on stocks. However, attention is
firmly shifting to corporate earnings after an encouraging start led by banks
and Netflix (NFLX). This week brings key results from Tesla (TSLA) on Tuesday
and Alphabet (GOOG) on Thursday. Both stocks have underperformed in recent
months, trading near their lows. With expectations tempered, any earnings
surprise could help extend the market’s recovery.
Outside of earnings, market watchers are
closely monitoring developments in monetary and trade policy. Any softening of
Trump’s stance on Fed independence—or a breakthrough in U.S.-China trade
negotiations—could provide a much-needed lift to equities.
Large investors are turning more cautious. The
SPDR S&P 500 ETF Trust (SPY) reported $4.8 billion in net outflows,
slightly improved from the previously reported $5.9 billion. However, this
pullback follows $19.3 billion in inflows just two weeks ago, which helped fuel
a 14% rally in the S&P 500. The waning enthusiasm suggests investors are
now locking in profits rather than making fresh bets.
From a technical standpoint, the S&P 500
appears to be forming a bearish pattern, with near-term downside targets between
5,020 and 5,120 points. A break above 5,450 would be needed to re-establish
bullish momentum.
Brent crude oil prices briefly touched the
resistance zone of $68–70 per barrel before pulling back, likely due to renewed
U.S.-Iran nuclear talks. While short-term corrections are expected, medium-term
projections still target a rebound toward $74–75 per barrel. Key support is
seen between $58 and $60.
Gold surged to a fresh high of $3,295 per troy
ounce on safe-haven demand. However, with the rally showing signs of
exhaustion, profit-taking appears imminent. Support lies at $3,250–3,280, with
resistance at $3,350–3,380. A broader technical correction toward $3,000
remains on the table.
The U.S. Dollar continues to face headwinds
amid speculation over the Fed’s independence. The EURUSD jumped 1.5% to
1.15730—an elevated level considering signs of de-escalation in global trade
tensions. While the bond market doesn’t support continued weakness in the
Dollar, current sentiment has driven a sharp rally in the Euro. If positive
trade developments persist, the EURUSD may undergo a sharp correction, with
downside targets between 1.0600 and 1.0700 in the coming months.