U.S. stocks look set to extend gains Tuesday, with the S&P 500 ready to test a one-month high, as investors continue to bet on near-term rate cuts from the Federal Reserve and global markets react to President Donald Trump's decision to suspend tariffs on Mexico.
The bullish narrative for U.S. markets, which has lifted benchmarks more than 5% so far this month, flowed through into international stocks in overnight trading, helping Asia's pan-regional MSCI ex-Japan index to a near 1% gain as investors dumped safe-haven assets and returned to riskier bets on growth and trade.
European stocks were solid, as well, with Germany's DAX performance index pacing mid-day gains as investors returned from yesterday's Whit Monday holiday and snapped up auto stocks, many of which have significant production facilities in Mexico, in the wake of Trump's weekend agreement with President Andr?(C)s Manuel L??pez Obrador.
The Stoxx Europe 600 was marked 0.9% while the DAX gained 1.3% and the Stoxx 600 Automobiles and Parts index, the sector benchmark, jumped 1.8%.
Britain's FTSE 100 was also on the rise, gaining 0.49% by m-day in London, but gains were capped as the pound edged higher against the U.S. dollar, to 1.2716, fueled by faster-than-expected April wage data, which came in at a 3.1% annual clip, just ahead of the Bank of England's 3% forecast.
"The unrelenting pursuit for more gains seen in equity markets suggests that traders may be sharing Trump's optimism over the prospects of a US-China trade deal happening by end-June," said FXTM analyst Lukman Otunuga. "It remains to be seen whether the latest trade-related rhetoric from the Trump administration will prove to be another disappointment, as markets have grown accustomed to, or whether risk appetite will hold up."
The Asian and European gains look set to help U.S. equities add to yesterday's gains, with futures contracts tied to the Dow Jones Industrial Average suggesting another 140 points will be added at the opening bell, taking the 30-stock average's win streak to a year-best of seven consecutive sessions.
Contracts linked to S&P 500 were also on the move, indicating an 16 point gain that will take the broader benchmark to within touching distance of a one-month high. Nasdaq Composite futures suggest a 64 point gain for the tech focused benchmark.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.05% lower in overnight trading at 96.73 as investors both returned to risk markets and continued to price in near-term rate cuts from the Fed.
The CME Group's FedWatch tool, in fact, suggests a 65.2% chance of a reduction in the key Fed Funds rate, which currently sits in a range of 2.25% to 2.5%, following the central bank's July meeting. No change, however, is expected when the Fed wraps up its next two-day meeting on June 19.
Global oil markets were given a modest boost by the dollar weakness, as well as reports that Russia is nearing an agreement with its OPEC allies that would see the cartel's production cuts, which are taking 1.2 million barrels from the market each day, extended well into the second half of the year. OPEC leaders, lead by Saudi Arabia's Khalid al-Falih, are expected to meet later this month in Vienna to announce a formal agreement.
Brent crude contracts for August delivery, the global benchmark, were seen 17 cents higher from their Monday close in New York and changing hands at $62.46 per barrel while WTI contracts for July, which are more tightly-linked to U.S. gasoline prices, were marked 51 cents higher at $53.77 per barrel.