US stock futures rally after long weekend on Trump’s tariff reprieve

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U.S. stock index futures surged on Tuesday following the Memorial Day weekend after former President Donald Trump softened his stance on steep tariffs against the European Union. Initially proposing a 50% tariff on EU imports to begin June 1, Trump has now postponed the deadline to July 9, allowing more time for trade negotiations. This reversal reduced immediate tensions between the U.S. and the 27-nation bloc, boosting investor confidence.

The markets reacted positively to the news, with Dow futures rising 1.32%, the S&P 500 gaining 1.52%, and Nasdaq futures jumping 1.63%. Major tech stocks including Apple, Alphabet, and Tesla saw notable gains in premarket trading. Nvidia shares rose ahead of its anticipated earnings report due Wednesday, while Trump Media & Technology Group surged over 10% on reports it plans to invest heavily in cryptocurrencies.

Global markets were mixed, but U.S. markets stood out with a robust rally, spurred by easing trade fears and investor optimism. U.S. Treasury yields dropped, particularly on long-term bonds, mirroring gains in Japanese government debt. Market watchers also eyed the upcoming release of consumer confidence data and the Federal Reserve’s meeting minutes for additional economic clues.

Despite the day’s optimism, UBS strategists cautioned that the current trade situation remains unstable, warning that there’s no guarantee the U.S. and EU will reach a favorable agreement by the July deadline. Additionally, Minneapolis Fed President Neel Kashkari emphasized a cautious stance on interest rates, saying they should remain steady until the inflationary impact of tariffs is clearer.

The rebound comes after a sharp selloff the previous week driven by rising concerns over the national debt and Trump’s proposed trade policies. While the S&P 500 remains about 6% below its record highs, its recent recovery has been supported by easing inflation and a return of risk appetite among investors. This week’s data, including the Fed’s favored inflation measure and GDP estimates, will be crucial in shaping market sentiment going forward.

Source: Reuters

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