US stock index futures pointed to a strong open on Monday. This saw a continuation of last week’s rally as investors prepare for some key economic data in this holiday-shortened week, along with speeches from central bankers.
US stock indices closed on a positive note on Friday, led by a 1.0% rally in the Dow Jones Industrial Average. It proved to be a strong week for all four majors with the Dow, S&P 500, NASDAQ and Russell 2000 adding 3.8%, 3.4%, 4.4% and 3.0% respectively.
Last week’s US data included a downside revision to GDP, and a hotter-than-expected inflation number. Despite this, investors sent the S&P 500 and NASDAQ 100 to fresh all-time highs as geopolitical tensions receded, and on a welcome breakthrough in President Trump’s tariff disputes after the US and China came to an accommodation.
Source: TN Trader
Tomorrow sees the world’s top central bankers gather in Sintra, Portugal for the European Central Bank’s (ECB) annual Forum. It’s possible that we will hear some interesting snippets during speeches. But it feels as if there’s little new that they can tell us.
The US Federal Reserve, the ECB and the Bank of Japan have all indicated that they are on hold as far as rate changes are concerned, and anything the Bank of England does is generally regarded as a local issue.
The main focus here is Mr Trump’s continued harassment of Fed Chair Jerome Powell, who he blames for keeping US interest rates far too high. Mr Powell is due to step down in May next year. Mr Trump has said he will be naming his successor as early as September in a move designed to undermine the Fed Chair’s authority.
Data-wise, investors are looking ahead to this Thursday’s Non-Farm Payrolls report for June. This key employment metric could provide more clarity on the health of the US labour market. It also comes a day earlier than usual due to US Independence Day on Friday 4th July.
The consensus expectation for Payrolls suggests a gain of around 120,000 jobs. Payroll data have held up relatively well, and decent unemployment numbers are another reason why the Fed has held back from cutting rates further. Any weakness here could lift the probability of a rate cut at the end of July, although the CME’s FedWatch Tool suggests that it’s unlikely.
Political developments in Washington are also drawing investor attention. President Trump’s much-publicised “one, big, beautiful” economic package faces its key test in the US Senate. The bill narrowly passed a procedural vote on Saturday night, paving the way for a full vote in the coming hours.
While the Trump administration is optimistic, the legislation’s path back through the House of Representatives is less certain, with some GOP lawmakers pushing against revisions in the latest version. That could mean that the bill fails to pass before Mr Trump’s preferred deadline of 4th July. Nevertheless, a successful passage would mark a major policy milestone for the Trump administration, though the road ahead appears complex.
On the trade front, Canada announced it would suspend the implementation of its digital services tax just one day before payments were due. The Canadian decision comes “in anticipation” of a broader, mutually beneficial trade deal with the US, signalling a step toward de-escalation in tariff tensions.
The move followed a sharp warning from President Trump, who, over the weekend, threatened to end all trade discussions with Canada over the proposed tax on American tech firms. With talks back on the table, both countries appear poised to revisit terms under more constructive conditions.
Last week’s trade agreement with China has boosted investor confidence that more trade deals are coming. Overall, there’s plenty here to keep the rally in US equities going, although, once again, the leading indices are overdue a pullback.
