A review of the day ahead in European and global markets by Wayne Cole.
Negotiators from the U.S. and China described recent trade talks as ‘constructive’ and an ‘important first step,’ signaling potential progress compared to earlier tensions. However, specifics were notably absent, with no mention of tariff levels. A joint statement is expected, though markets remain skeptical of claims of a ‘deal.’
Relief over the absence of further escalation has boosted S&P 500 futures by 1.4% and Nasdaq futures by nearly 2%. European stock futures have also risen modestly. The dollar has seen slight gains, while Treasuries experienced knee-jerk selling as expectations for Federal Reserve rate cuts diminish.
The probability of a June rate cut is now at 17%, with July at 59%. Futures imply 63 basis points of cuts this year, down from over 110 bps in mid-April. Other developments include a fragile ceasefire between India and Pakistan, and Ukraine’s president expressing readiness to meet with Russia’s leader.
Economic indicators like U.S. CPI on Tuesday may provide hints about price increases, while retail sales forecasts for April remain flat.
— new from Reuters