S&P 500 hits highest since March as markets react to unexpected respite in U.S.-China tariff war

New York trading floors posted impressive gains on Monday, with three key indexes soaring sharply and the S&P 500 hitting its highest since early March. The reason for this optimism was the announcement of a temporary easing of tariffs between the US and China, a move that investors perceived as a potential turning point in the protracted trade conflict.

Tariff respite: for 90 days - without penalty rates

According to a joint statement, Beijing and Washington agreed to unilaterally reduce mutual tariffs for a three-month period. The United States is ready to reduce tariffs on Chinese products from 145% to 30%, while China will reduce rates on American goods from 125% to 10%.

Investors are betting on risk

Financial markets greeted the news with relief: assets traditionally considered "safe havens" have taken a back seat, giving way to riskier investments. However, investor enthusiasm is still moderate - market participants are waiting for specifics on further negotiations and the final fate of the tariff policy.

Signs of stabilization: markets are recovering from losses

The situation began to change after April 9, when Washington granted a 90-day tariff deferral for all countries except China. Additional impetus came from strong corporate reports and the partial trade agreement between the US and the UK concluded last week. These factors allowed the S&P 500 and Nasdaq indices to gradually regain the positions lost at the beginning of the month.

Wall Street in the green: investors celebrate a powerful breakthrough

US stock markets confidently went up: investors are returning to active play amid easing fears.

The trading session on Monday brought an impressive rise to US stock indices - the largest one-day jump since the beginning of April. The main stock market indicators demonstrated not just growth, but also overcame key technical levels, which investors perceived as a signal of a possible change in trend. The S&P 500, in particular, rose above its 200-day moving average for the first time in a month, which is traditionally seen as a positive sign.

Briefly about the main points: index movements

• The Dow Jones Industrial Average rose by 1,160.72 points (+2.81%), closing at 42,410.10, its highest since March 26;

• The S&P 500 added 184.28 points (+3.26%) to close the day at 5,844.19, its highest close since March 3;

• The Nasdaq Composite strengthened by 779.43 points (+4.35%), reaching 18,708.34, a record since February 28;

• The Nasdaq as a whole has already recovered 22% from its April low, although it is still 8% below its all-time high set on December 16.

Panic Eases: VIX Loses Height

The VIX, the index of market nervousness, is falling below a psychologically important level.

After soaring to 60 in April on tariff worries, the CBOE Volatility Index, or Wall Street's so-called "fear barometer," has fallen below 20 for the first time since late March. This may indicate a return of confidence among investors and a reduction in anxious expectations.

Gold Loses Shine

Amid rising risk appetite, precious metals are losing favor. Gold, traditionally considered a "safe haven" in times of instability, fell in price by about 2.6%, reflecting the change in market sentiment. Who's Winning: Technology and Retail

Most sectors showed growth, with technology companies and the consumer sector performing particularly well.

Of the eleven sectors that make up the S&P 500, ten ended the day in the green. The biggest gainers were:

• Consumer goods (durable goods and services) — +5.66%;

• Information technology — +4.66%.

The only exception was the utilities sector, which lost its appeal amid increased interest in risky assets. It fell by 0.68%.

IPhone to get more expensive? Apple in the spotlight

Apple shares (ticker: AAPL.O) confidently went up, adding 6.3% amid reports that the company may revise the pricing policy for new iPhone models planned for the fall. Investors took this as a signal of Apple's intention to strengthen its margins and enhance the premium image of its core product.

Earnings Season Ends: Walmart on the Approach

Most companies have already released their financial results, and now it's the turn of the largest retailer.

The quarterly earnings season is coming to a logical end: more than 90% of the companies from the S&P 500 index have already disclosed their financial results. The next significant event is the publication of data from Walmart (WMT.N), scheduled for the coming days. The market is watching with interest how the retail giant copes with inflationary pressures and changes in consumer behavior.

A $12 billion deal: NRG aims for the lead

NRG Energy (NRG.N) shares demonstrated a dizzying growth of +26.2% in a day, making them the leader among the S&P 500 components. The reason was the announcement of a deal with LS Power: the company will buy out electricity generation assets worth $12 billion. The purchase will strengthen NRG's position in the energy infrastructure sector and significantly expand its presence in the country.

Fed on the Line: A Week of Statements

A number of Federal Reserve officials, including Chairman Jerome Powell, are scheduled to make public statements in the coming days. These statements could shed light on the central bank's next steps, especially given the uncertainty surrounding inflation and economic growth.

Rate Cut Forecasts: Markets Look to September

Investors are looking to the Fed to ease policy this fall.

Analysts and traders are pricing in two 25 basis point rate cuts by the Fed before the end of 2025. According to LSEG, the first cut could come as early as September, supporting the stock market and adding to appetite for growth stocks.

Asia Rejoices in Trade Truce

The US-China Tariff Suspension Was a Pleasant Surprise

The easing of tensions between the world's two largest economies has sparked a strong rally in Asian markets. This was particularly evident in Japanese indices, where after positive news from the US, markets in Tokyo have sharply risen, catching up with the wave of global optimism.

Medicines and Trump: Japan's pharmaceutical sector is in turmoil

Donald Trump's social media post about inflated prices for medicines in the US has sparked a sharp reaction in the Japanese market, with shares of pharmaceutical companies falling sharply on Monday. However, the subsequent clarification that the president is primarily focused on regulating prices for imported drugs quickly reversed the trend, and the healthcare sector on the Nikkei began to regain its positions.

The medical sector is on the rise, as investors reconsider priorities.

Amid market volatility in other sectors, the European pharmaceutical index SXDP has been among the few to confidently outperform the broader pan-European STOXX index this year. The sector has shown resilience amid geopolitical and economic risks, making it attractive to investors looking for a safe haven.

The US president's statement could impact pharma companies on both sides of the Atlantic.

The market reacted immediately to Donald Trump's controversial statement about an "overpriced fat drug," which seemed to be aimed at injectable obesity drugs from Novo Nordisk (NOVOb.CO) and Eli Lilly (LLY.N). The words could signal future efforts to reduce government spending on such drugs in the US — or pressure on manufacturers outside the country, especially in Europe.

Bayer and uncertainty: where to look?

German holding company Bayer AG (BAYGn.DE) has released its quarterly results, and the market is hoping to hear from the company a strategy on how to move forward in the face of global pressure on healthcare pricing. In the near future, analysts will be focused on the details of the forecasts and possible adjustments to plans.

The dollar is correcting, but not giving up

The American currency holds its ground after a rally caused by trade news.

The US dollar weakened slightly in the Asian session, but still holds the bulk of recent gains against key currencies - the yen, euro and Swiss franc. This is facilitated by a temporary "truce" in the trade battles between the US and China. However, market participants remain wary: a three-month delay in tariffs does not remove all questions.

Europe opens cautiously

Despite the rapid growth at the beginning of the week, global exchanges are showing signs of cooling. Futures on European indices point to a moderate opening, while in the US, experts expect a slight pullback after a sharp rally. Investors prefer to wait for new benchmarks.

ZEW and Germany: will confidence return?

The ZEW Economic Institute is preparing to publish its May business expectations indices - and analysts are hoping for a return to optimism among investors in Germany. Recall that in April, the figures reached an anti-record since the beginning of the conflict in Ukraine, largely due to fears caused by trade disputes.

Inflation data key to future rates.

US investors are holding their breath ahead of the Consumer Price Index (CPI) release. The report will be a decisive factor in assessing the pace of inflation and the Fed's potential actions. The market is currently pricing in a 57 basis point rate cut by the end of the year, down from more than 100 basis points just a month ago. Any deviation from the forecast could lead to a sharp revaluation of assets.