Global markets started the week with a burst of energy, as two major developments captured investor attention: the S&P 500 futures (SPX) tearing through short-term resistance, and a powerful rally in Hong Kong stocks on a surprise tariff-cutting agreement between the U.S. and China.

SPX Futures: Strength Reasserted Above Key Levels

The S&P 500 futures are flexing their muscles, smashing through the 5700 level and trading well above the 200-day moving average — a technical milestone it hasn’t achieved consistently since March. This move not only reaffirms bullish sentiment in U.S. equities but also suggests a growing confidence in the underlying economy and earnings outlook.

The 5700 zone had been acting as a firm ceiling in recent sessions, but momentum picked up steam, powered by a combination of solid tech earnings, stable macro data, and a general risk-on appetite. With the breach now confirmed, all eyes are on the next critical resistance level at 5900. That area holds particular psychological weight — if bulls can push through and close above it, the conversation is likely to shift toward the all-time highs (ATHs) from late 2023.

Technical traders are especially alert at this juncture. Momentum indicators are climbing, breadth is broadening, and sector participation is expanding beyond just the megacaps — all healthy signs for a potential leg higher.

Hong Kong Markets Surge on U.S.-China Tariff Breakthrough

Meanwhile, across the Pacific, Hong Kong equities delivered a dramatic upside gap after a surprise breakthrough in U.S.-China trade negotiations. At 15:00 local time, the market reacted sharply to the news that both countries had agreed to mutual tariff cuts — a development that landed sooner than many analysts had expected.

The reaction was swift and sector-specific. Export-sensitive names stole the spotlight:

• Techtronic Industries rallied 6.7%, benefiting from a more favorable global trade environment.
• Sunny Optical soared nearly 15%, driven by expectations of renewed demand in the international supply chain.

On the flip side, defensive sectors like utilities and domestic consumption plays lagged, as capital rotated aggressively toward cyclical and trade-sensitive industries.

Despite the bullish price action, there was a notable anomaly: Southbound flows, which represent mainland Chinese investors buying Hong Kong-listed stocks, registered a significant net outflow of US$2.37 billion — the second-largest single-day outflow on record. This divergence between price action and capital flows may hint at underlying caution or profit-taking by local investors, even as international sentiment turned markedly more optimistic.

What’s Next?

The dual developments — a technically strong SPX and an improving U.S.-China trade backdrop — could serve as catalysts for sustained risk appetite in global markets. But as always, the rally will be tested by upcoming data, central bank commentary, and geopolitical variables.

In the short term, traders are watching whether SPX can clear 5900 with conviction. Meanwhile, Hong Kong bulls will be looking to see if the tariff news leads to broader policy coordination or if this was a one-off gesture.

Either way, the week has started with a bang — and both bulls and bears will need to stay nimble as momentum builds.