Futures tracking the S&P 500 and Nasdaq touched record highs on Monday, as optimism over U.S. trade negotiations with its key partners helped support upward momentum in markets.
Shares of technology heavyweights rose premarket after Canada scrapped its digital services tax targeting U.S. tech firms, just hours before it was due to take effect, in a bid to advance stalled trade negotiations with the United States.
Shares of Amazon, Meta Platforms, Alphabet and Apple edged up in the range of 0.6 per cent and 1.7 per cent.
The benchmark S&P 500 and the tech-heavy Nasdaq Composite rose to all-time highs on Friday, as bets of deeper U.S. interest rate cuts and renewed optimism around AI helped markets rebound from the months-long tumult sparked by U.S. President Donald Trump’s tariff policies and geopolitical tensions.
Focus now shifts to a July 9 deadline for countries to reach deals with the United States or see tariffs spike higher, but Mr. Trump has said he could extend the tariff deadline or “make it shorter”.
Investors are also looking into economic data and fiscal policy developments to see if the latest bull run in U.S. stocks can continue.
U.S. Senate Republicans pushed Mr. Trump’s sweeping tax cut and spending bill forward in a marathon weekend session. Senators are scheduled to start voting on a potentially long list of amendments to the bill beginning at 9 a.m. EDT Monday.
Key economic data releases this week include monthly non-farm payrolls and the Institute for Supply Management’s survey on manufacturing and services sectors for June. Several U.S. central bank officials including Federal Reserve Chair Jerome Powell are scheduled to speak later this week.
A raft of soft economic data and expectations that Mr. Trump will replace Powell with someone dovish have pushed up bets of rate cuts from the Fed this year.
By 5:48 a.m. ET, S&P 500 e-minis were up 24.5 points, or 0.39 per cent. Nasdaq 100 e-minis climbed 137 points, or 0.6 per cent and Dow e-minis added 205 points, or 0.46 per cent.
Despite record highs for U.S. stocks, the S&P 500, Nasdaq and Dow are set for their weakest first-half performances since 2022.
Among other movers, shares of big U.S. banks rose after the Federal Reserve’s annual “stress test” found twenty-two of the largest U.S. banks are well-positioned to weather a hypothetical severe economic downturn and continue lending.
The optimistic showing could lead to banks upping how much excess capital they plan to distribute to shareholders via dividends or stock buybacks.
Shares of JPMorgan Chase, Bank of America, Citigroup and Wells Fargo rose in the range of 0.4 per cent and 1.9 per cent.
Juniper Networks rose 8.4 per cent after the U.S. Justice Department settled its lawsuit challenging server maker Hewlett Packard Enterprise’s all-cash acquisition of the networking gear maker for US$14-billion.
Hewlett Packard Enterprise shares rose 5.6 per cent.
World shares held just below recent record highs on Monday as the revival of U.S./Canada trade talks helped risk sentiment, while the U.S. dollar dipped on the prospect of this week’s U.S. jobs data ushering in an earlier Fed rate cut.
Investors were also keeping a wary eye on the progress of a huge U.S. tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Mr. Trump’s preferred July 4 deadline.
The Congressional Budget Office estimated the bill would add US$3.3-trillion to the nation’s debt over a decade, testing foreign appetite for U.S. Treasuries.
“We have been surprised at just how resilient markets have been in the face of a tremendous amount of uncertainty,” Kevin Gardiner, global investment strategist at Rothschild & Co, said.
“Markets continue to look resilient, though we note that we haven’t seen equity valuations look more expensive since 2000,” he added.
European shares nudged down, though European defence stocks led sectoral gains with a rise of just over 1 per cent. The sector has remained buoyant since last week’s NATO pledge to spend 3.5 per cent of GDP on core defence and 1.5 per cent on broader defence-related measures, a jump worth hundreds of billions of dollars a year.
Attention also turned to a European Central Bank conference in Sintra, key euro zone inflation reports due this week and the closely-watched U.S. non-farm payrolls report on Thursday.
Asian markets closed on a mixed note with Chinese blue chips up 0.4 per cent, after surveys showed manufacturing improved slightly in June while service activity picked up. Hong Kong stocks closed down 0.9 per cent while Japan’s Nikkei rose 0.8 per cent.
A holiday on Friday means U.S. payrolls data will come a day early, with analysts forecasting a rise of 110,000 in June and a rising jobless rate reaching almost a year high at 4.3 per cent.
The resilience of the labour market is a major reason the majority of Federal Reserve members say they can afford to wait on cutting rates until they can gauge the true impact of tariffs on inflation, so a weak report would stoke speculation of a rate cut in July rather than September.
The prospect of policy easing has helped Treasuries weather worries on the ballooning U.S. budget deficit.
Ten-year Treasury yields fell 3 basis points to 4.25 per cent , having fallen 7 bps last week.
The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth.
The euro rose to $1.1721, having climbed more than 1 per cent last week to its highest levels since 2021 against a broadly weak dollar.
Sterling held just below a similar peak hit last week, trading just below $1.37.
The dollar was down 0.4 per cent to 144.13 yen and the dollar index eased 0.2 per cent to 97.201, a whisker above three-year lows.
The dollar has fallen by more at this stage in the year than in any previous year since the U.S. moved to a free-floating exchange rate in 1973.
“At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move,” James Reilly, a senior markets economist at Capital Economics, said.
In commodity markets, the general revival in risk sentiment weighed on gold, which rose 0.5 per cent to US$3,289 an ounce but held below April’s record top of US$3,500.
Oil prices continued to struggle on concerns about plans for increased output from OPEC+, which contributed to a 12-per-cent slide last week.
Brent rose 0.3 per cent to US$68 a barrel, while U.S. crude rose 0.25 per cent to US$65.7 per barrel.
Reuters
