S&P 500 Forecast: SPX struggles as trade war worries offset solid banks' earnings

US futures

Dow future 0.57% at 39800

S&P futures -2% at 5297

Nasdaq futures 0.6% at 18449

In Europe

FTSE 4.4% at 7980

Dax 5.% at 20405

• Stocks struggle at the end of a roller coaster week
• China raises tariffs to 125% on US imports
• Banks’ earnings impress
• Oil is set for 3.5% losses

Stocks slip as the US–China trade war ramps up & earnings season starts

U.S. stocks are opening lower as investors asses the latest developments surrounding trade tariffs after China raised its levies on the US to 125%.

The move comes as trade tariff headlines have dominated trading sentiment, resulting in a rollercoaster week for the markets. This week President Trump paused reciprocal tariffs on all countries except China before lifting tariffs on China to 125% and then 145%..

The escalating trade war between the world's two largest economies raises concerns over a US recession and global economic growth.

On the data front PPI unexpectedly fell in March, driven by declines in food and energy costs. The data comes after US CPI inflation cooled by more than expected to 2.5% in March. Still, the Fed is likely to remain cautious given the dramatic change in the economic outlook.

Earnings season kicked off today with a solid performance from banks. However, the outlook was cautious given the uncertain economic outlook.

Corporate news

JP Morgan is rising over 2% after the investment banking giant posted Q1 earnings that beat expectations on stronger-than-expected revenue. However, CEO Jamie Dimon struck a cautious note on the outlook of the broader economy.

Morgan Stanley is up 1.5% after beating quarterly earnings thanks to solid investment banking and wealth management income.

Wells Fargo is also rising 1.4% after posting mixed Q1 results. Adding the full costs, but felt that revenue fell short as higher interest rates impacted the business.

Apple is studying after 12% losses over the past month as the Chinese-U.S. trade war escalates.

S&P500 forecast – technical analysis.

The S&P 500 recovered from the 4800 low, but ran out of steam below 5500 and headed back below  5400. The doji candle shows indecision. The bearish trend remains in tact, with  death cross formation also forming. Sellers will need to break below 5130 to bring 5000 and 4800 into play. Any recovery must retake 5400 and 5500 to create a higher high.

FX markets – USD falls, EUR/USD rises

The USD fell again on Friday, dropping to a three year low of 99.25. The DXY is on track to fall 3.5% this week as investors fret over the outlook for the economy and as the USD losses safe haven appeal.

The EUR/USD is rising toward 1.14, trading at levels last seen in 2022. The EUR has been a key beneficiary of the sell-off in the US dollar as investors look to the stability of the eurozone bloc, giving the euro a more safe-haven status.

The GBP/USD is rising above 131, capitalising on a weaker USD and benefiting from a stronger-than-expected UK GDP. The UK economy grew 0.5% month over month in February, ahead of the 0.1% forecast. While this is encouraging, the impact of trade tariffs will likely mean that growth won’t be sustained at these levels.

Oil falls 3.5% this week

Oil prices are falling, and are on track to drop a further 3.5% this week, extending a decline of 10.6% last week.

Price is declining amid an escalation of the US-China trade war, which threatens to slow economic growth in both countries.

The US Energy Information Administration lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices. The agency lowered its USN global oil demand forecast for this year and 2026.