empty
05.06.2025 09:20 AM
The Market Finds Good in the Bad

Markets have risen for the third consecutive day, interpreting the current situation as widespread trading uncertainty — far from a market crash. This allows for a calmer and more rational outlook. Things are not as bad as they seem. Signs of a cooling U.S. economy are increasing the likelihood of the Federal Reserve resuming a cycle of monetary easing in the near future, while the success of global equities is providing support for the S&P 500 in a challenging environment.

Barclays was among the latest banks to raise its forecast for the broad stock index to 6050 by the end of 2025, up from 5900, citing that the worst tariff drama is behind us. Derivatives predict S&P 500 fluctuations in response to the upcoming U.S. employment report within a range of +/-0.9%, below the historical average of +/-1.3%.

The market has calmed down and plans to return to trading under the "TACO" principle—"Trump Always Causes Outrage"—only in July, when the 90-day grace period from the White House ends. Two possible scenarios are that the president backs down, fearing an S&P 500 collapse, or tariffs sharply increase. In the first case, the broad market index will renew record highs; in the second, it will plunge due to recession fears.

Global Stock Market Dynamics

This image is no longer relevant

Meanwhile, the global stock market has already surpassed its historical highs achieved in February, which supports the S&P 500, even though other indices are performing better. Capital continues to flow out of the United States. Bank of America recommends focusing on emerging markets, especially Eastern Europe, suggesting investments in the region could deliver double-digit returns amid a weakening U.S. dollar.

A consistently high global risk appetite and belief that the worst of the trade conflicts is over allow the S&P 500 to move upward. The broad stock index is undeterred by the unexpected decline in U.S. service sector activity below the critical 50 mark for the first time in a year or by the worst monthly private sector employment data from ADP in two years.

Dynamics of Emerging Market Stocks and the U.S. Dollar

This image is no longer relevant

Negative data has pushed the probability of a Fed rate cut in September to 90%. The futures market is confident that monetary easing will occur by October and December. Investors believe the cooling U.S. economy will force the Fed to throw it a lifeline — excellent news for equities.

This image is no longer relevant

Thus, optimism dominates. However, it is dangerous optimism tied to the expectation that Donald Trump will back down from large-scale tariffs. A bubble in the U.S. stock market continues to inflate. The question is not if but when it will burst.

Technical Outlook:

On the daily S&P 500 chart, bulls still hope to restore the uptrend. Long positions opened from 5945 should be maintained. However, a drop below 5900 or a bounce from the pivot level of 6060 would be grounds for a reversal and shift to short positions.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/JPY. Analysis and Forecast

During the European session on Monday, the GBP/JPY currency pair is approaching the 198.30 level. The pair finds some support from UK housing data: in June, house prices rose

Irina Yanina 19:40 2025-07-07 UTC+2

XAU/USD. Geopolitical Risks May Provide Additional Support to the Safe-Haven Precious Metal

Today, gold is displaying an intraday bearish tone despite rebounding from the $3300 level. Strengthening demand for the US dollar remains the primary factor pressuring gold, limiting its upward movement

Irina Yanina 19:09 2025-07-07 UTC+2

Bitcoin leads turbulent life

Beneath the calm surface of BTC/USD lie turbulent underwater currents that are reshaping the cryptocurrency market structure. Still waters run deep. On the surface, it seems that life

Marek Petkovich 15:48 2025-07-07 UTC+2

USD/JPY. Analysis and Forecast

The USD/JPY pair maintains a bullish bias, staying above the psychological level of 145.00, reflecting intraday selling pressure on the Japanese yen amid U.S. dollar strength. Investors are concerned that

Irina Yanina 12:59 2025-07-07 UTC+2

USD/CAD. Analysis and Forecast

On Monday, the USD/CAD pair continued its upward movement for the second day in a row. This rise is driven by a combination of factors. Crude oil prices initially declined

Irina Yanina 12:39 2025-07-07 UTC+2

GBP/USD. Analysis and Forecast

The GBP/USD pair began the new week attempting to hold the key psychological level of 1.3600. However, amid mixed fundamental factors, it has not been successful so far. The British

Irina Yanina 12:14 2025-07-07 UTC+2

Three days left to avert tariffs

As July 9, the deadline set by Trump, approaches, the United States main trading partners spent the weekend rushing to finalize trade agreements or lobbying for more time. Meanwhile, Treasury

Jakub Novak 11:24 2025-07-07 UTC+2

Investors see no alternatives

Uncertainty is commonly the enemy of investment, but not in 2025. A double dose of unpredictability – from geopolitics and White House tariffs – hasn't stopped the S&P 500 from

Marek Petkovich 11:17 2025-07-07 UTC+2

What to Watch on July 7th? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic publications are scheduled for Monday, and none of them are significant. Let us recall that Friday was practically a semi-holiday, as the United States celebrated Independence

Paolo Greco 08:29 2025-07-07 UTC+2

GBP/USD Overview on July 7, 2025

The GBP/USD currency pair remained nearly flat throughout Friday, as the U.S. trading session was essentially inactive on that day. There were no macroeconomic publications, and the market chose

Paolo Greco 07:25 2025-07-07 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.