- Global markets moved cautiously ahead of the US payrolls report and possible Trump-Xi trade talks.
- S&P 500 futures gained slightly but lacked momentum after the benchmark’s mostly flat close.
- Holding above key moving averages, the S&P 500 may rally if it breaks through 6,000 resistance.
- Looking for actionable trade ideas to navigate the current market volatility? Subscribe here to unlock access to InvestingPro’s AI-selected stock winners.
Global equity markets edged tentatively higher, with most investors opting to keep their powder dry ahead of Friday’s all-important US payrolls report and the potential call between leaders of the world’s two largest economies to resume trade negotiations.
In Europe, the German DAX hit a fresh all-time high, with all eyes on the ECB, widely expected to cut interest rates yet again—a move that’s been well telegraphed and thus unlikely to jolt sentiment.
Meanwhile, in Japan, long-dated government bonds rallied following a stronger-than-feared 30-year debt auction, providing some welcome calm after recent volatility in the bond market. The drop in Japanese yields served to soothe nerves and lent a modest boost to risk assets.
Over in the US, S&P 500 futures were up 0.1%, offering little follow-through after the benchmark closed largely flat in the prior session. But shining again were precious metals, with silver breaking $35 for the first time since 2012.
When Will the Trump-Xi Call Take Place?
In a social media post yesterday, Trump called Xi “extremely hard to make a deal with,” while simultaneously insisting he “likes” the Chinese president. Classic Trump ambiguity there. Still, markets are betting — or at least hoping — that the direct line between Washington and Beijing could ease trade tensions, even temporarily.
That could offer the markets another boost. But traders will likely remain sceptical about any lasting progress for the trade situation. After all, the latest 50% tariffs on steel and aluminium are already in place. These aren’t just threating anymore — they’re policy. So, it is super important that the potential Trump-Xi call leads to some concrete movement, and soon, for markets to justify buying the April dip this aggressively.
Poor US Data Raises Fed Cut Expectations
Ironically, the modest gains in stocks in recent days have been supported in part by weaker data, as that has raised the probability of a sooner rate cut by the Fed. Although we had a stronger-than-expected April JOLTS job openings, let’s not overstate it, as several other macro pointers have been disappointing this week.
Monday’s softer ISM manufacturing print was followed by a poor showing from the ADP payrolls report (37K vs. 114K expected), while the all-important ISM services PMI fell back into contraction, printing 49.9 vs. 52 expected, down from 51.6 report the month before. We saw big drops in the business activity (-3.7 points) and new orders (-5.9 points), although the employment subcomponent moved back above the expansion threshold at 50.7.
The disappointing data has painted a less-than-rosy picture, fuelling concerns that President Trump’s trade war may be exacting a greater toll than previously thought. While today’s weekly jobless claims will garner some attention, it is Friday’s nonfarm payrolls print that is expected to be the real needle-mover.
Consensus forecasts point to a slowdown in job creation, with 127,000 new positions expected—down from 177,000 last time out—while the unemployment rate is seen holding steady at 4.2%.
Frankly, it would take a sizeable downside surprise to shake markets from their current torpor and stoke any meaningful uptick in volatility. Investors may also proceed with some caution until the Trump-Xi call materialises. After that, stocks could face renewed pressure — especially if the call underwhelms or if Friday’s NFP disappoints, or if bond markets resume sliding.
So, there are lots of risks facing the markets, but let’s see if Trump will manage to keep investors happy.
Technical Analysis and Trade Ideas
From a technical point of view, the S&P 500 futures chart is still bullish, but lacking momentum. If we see a convincing break above key resistance at 6,000, then that could potentially pave the way for a run towards February’s all-time high of 6157. Otherwise, if the 6K resistance holds, then we will still need to see a complete bearish reversal and a breakdown of a few support levels before turning bearish.
So, the bears have a lot of work to do, especially with the index now holding above its 21 and 200-day moving averages for a while now, suggesting the bears’ control has almost completely vanished. Anyway, short-term support levels to watch include 5900 and 5872 and 5837.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.