US Stock Futures Fall With Dollar, Crude Oil Sinks: Markets Wrap

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May 5, 2025 – 14:29

(Bloomberg) — The dollar weakened and US equity-index futures dropped, threatening to end the S&P 500’s longest winning streak in two decades, as uncertainty about US trade policy hung over markets. Crude oil slumped after OPEC+ announced another supply increase.

A gauge of the greenback declined for a second day and contracts for the S&P 500 retreated 0.7% after President Donald Trump said he had no plans to talk to his Chinese counterpart this week, though he signaled trade deals with other unspecified partners could come soon.

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Crude oil plunged as much as 5.1% in New York before paring the decline. Gold advanced, and Treasuries were steady.

Financial markets have steadied in the past two weeks as Trump dialed back his tariffs amid signs that trade talks are progressing, with the S&P 500 rallying for two straight weeks and notching nine successive days of gains. Still, a trade deal with China would be a prerequisite for the US benchmark to sustain the advance, according to strategists at Morgan Stanley led by Michael Wilson.

“Recent cyclical gains in equities don’t change the structural ‘Sell America’ theme,” said Charu Chanana, the chief investment strategist at Saxo Markets in Singapore. “Trade-deal optimism is giving way to the reality of complex, slow-moving negotiations.”

European stocks were steady in subdued trading. Europe’s benchmark Stoxx 600 index has posted nine days of gains through Friday, the longest streak in a year, buoyed by earnings significantly ahead of expectations.

Among individual movers in Europe, Austrian lender Erste Group Bank AG climbed as much as 7% after agreeing to buy much of Banco Santander SA’s operations in Poland for about €7 billion ($7.9 billion). Santander Bank Polska SA fell more than 5%.

With first-quarter earnings season drawing to a close, focus shifts to the Federal Reserve’s policy decision on Wednesday. The central bank is expected to keep interest rates on hold despite pressure from Trump and concerns about a tariff-induced economic slowdown.

“The Trump administration’s trade policy has put the Fed in a difficult position and resulted in a high degree of policy uncertainty,” said Michael Krautzberger, global CIO for fixed income at AllianzGI. “Short term interest-rate markets do not anticipate a Fed rate cut at the May meeting – and we agree – but there is a growing assumption that if current US tariff policy remains broadly intact over the coming months, the Fed will eventually have to respond to any sharp deterioration in US activity.”

Meanwhile, the OPEC+ major production increase added to supply at a time when demand is challenged by the drag from the trade war. The alliance — led by Saudi Arabia and Russia — has been reversing prolonged output curbs that were meant to support prices, but which cost it market share to rival drillers.

“Risk has skewed rapidly to the downside,” Brian Leisen, a commodity strategist at RBC Capital Markets, wrote in a note to clients.

In corporate news, Shell Plc is working with advisers to evaluate a potential acquisition of BP Plc, though it’s waiting for further stock and oil price declines before deciding whether to pursue a bid, according to people familiar with the matter. Shell’s shares dropped 1.9%.

Warren Buffett, who built Berkshire Hathaway Inc. into a business valued at more than $1.16 trillion and himself into a celebrity billionaire renowned for his investing acumen, will step down at year-end after six decades atop the conglomerate.

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