Last Friday, US stock indices closed higher. The S&P 500 rose by 0.40%, while the Nasdaq 100 added 0.20%. The Dow Jones Industrial Average strengthened by 0.47%.

The record-breaking rally in US equities appears poised to continue after the European Union reached a trade agreement with the United States, further easing concerns over a destructive trade war. Clearly, the outlook for American companies has improved. The removal of trade barriers with the EU implies freer movement of goods and services, which will boost profits and revenues. Investors welcomed the news with enthusiasm, reflected in a surge in major stock indices. However, it is important not to overlook other market drivers. Inflation remains a concern, and the Federal Reserve is likely to maintain its tightening policy to contain price growth. This could weigh on corporate earnings and slow economic expansion.

Today, S&P 500 futures rose 0.5% following the index's record close on Friday. Futures on European equities climbed 1.1% after the US–EU deal. The MSCI All Country World Index reached a record high, while Asian stocks remained flat. The euro was little changed after earlier gains against the dollar. Crude oil prices rose by 0.5%.

Markets, recovering from April lows, are taking comfort in the latest trade agreement and signs of an extended truce between the US and China. A 15% tariff is far from the 30% promised by Trump but also more than the 10% the Europeans had hoped for. Clearly, this week's optimism will be tested by key data releases, upcoming meetings of the Federal Reserve and Bank of Japan, and earnings reports from large-cap companies that could shape market sentiment and the global economic outlook.

This deal brings relief to equity investors worldwide, though any follow-through rally might be muted, as the agreement was likely priced in following the Japan trade pact. It is quite possible that the "sell America" wave will not return following these trade developments.

Meanwhile, stocks in Hong Kong and China climbed after the South China Morning Post reported that the US and China are expected to extend their tariff truce by another three months. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in Stockholm today. Additionally, Goldman Sachs raised its 12-month target for the MSCI China Index on higher valuations, a brighter trade outlook, and a stronger yuan.

In Asia, Japanese Prime Minister Shigeru Ishiba signaled his intention to remain in office despite mounting calls for resignation from within the ruling party.

S&P 500 technical outlook:Today's main objective for buyers will be to break through the nearest resistance at $6,423. A move above this level would confirm the uptrend and pave the way toward $6,434. An equally important goal for bulls will be to hold above $6,446, which would further reinforce their position. If downward movement occurs amid waning risk appetite, buyers must step in near the $6,410 level. A break below this mark could swiftly push the instrument back to $6,400 and open the path toward $6,392.