United States stock futures fell on Sunday evening (Monday AEST), signalling a cautious start to the new trading month after Wall Street posted strong gains in May.
By 9:25 am AEST (11:20 pm GMT), futures for the Dow Jones Industrial Average and the S&P 500 were each down 0.3%, while Nasdaq-100 futures lost 0.4%.
On Friday, the S&P 500 wrapped up May with a gain of more than 6%, marking its best monthly performance since November 2023. The tech-heavy Nasdaq Composite jumped over 9% for the month, while the Dow Jones Industrial Average added around 4%.
On the economic data front, the April personal consumption expenditures (PCE) index rose by 0.1% month-on-month on both the headline and core measures, leaving the annual inflation rates at 2.1% and 2.5% respectively.
ANZ analysts noted in a client briefing, "We judge that the disinflation progress this year justifies Fed easing and were it not for current uncertainty, we think the Fed should be cutting now.
"But with some measures of longer run inflation expectations showing signs of being destabilised by tariffs, the Fed is likely to exercise patience. Labour market strength is giving the Fed time."
Meanwhile, legal uncertainty surrounding President Donald Trump’s tariffs returned to focus last week. The U.S. Court of International Trade struck down much of the administration’s tariffs on Wednesday, instructing the government to cease collections.
However, the following day, a federal appeals court granted a temporary stay, effectively reinstating the levies while legal proceedings continue.
Despite the ongoing legal battles, Trump’s top economic advisers have expressed continued confidence in the tariffs. Commerce Secretary Howard Lutnick said on Fox News over the weekend that the duties are “not going away”.
Kevin Hassett, another key advisor, also suggested the possibility of renewed dialogue between Trump and China’s President Xi Jinping, stating that the two leaders could speak as early as this week.
However, he acknowledged that no meeting date has been confirmed. His remarks followed a renewed escalation in trade tensions last week, with Trump declaring in a Truth Social post on Friday that China has “TOTALLY VIOLATED ITS AGREEMENT WITH US.”
Looking ahead, investors are awaiting several key economic reports this week that may shed light on how tariffs are impacting the broader U.S. economy. The focus will be on Friday’s May nonfarm payrolls report, a key gauge of labour market strength and potential driver of Federal Reserve policy.
