US stock futures indicated a muted start to Monday’s trade, as investors refrained from taking aggressive bets while closely monitoring the latest developments in the Middle East. A rebound in crude oil prices also weighed on sentiment.
Futures tied to the S&P 500 slipped 0.1% early Monday, 11 May, while Dow Jones Industrial Average futures declined 0.2%. Nasdaq Composite futures remained largely flat.
Despite the cautious start, US equities are coming off a strong run. The S&P 500 and Nasdaq had just posted their sixth consecutive weekly gain, with both indices ending Friday at fresh record highs following a stronger-than-expected jobs report.
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US stock futures indicated a muted start due to investor caution, monitoring Middle East developments and a rebound in crude oil prices. Hopes for a peace deal between the U.S. and Iran faded after President Trump rejected Iran’s proposal.
Donald Trump’s rejection of Iran’s proposal sent crude oil prices higher amid fears that the closure of the Strait of Hormuz could persist. Brent crude futures surged, and WTI crude futures crossed the $100-per-barrel mark.
Hopes for a near-term peace deal between the U.S. and Iran have faded. President Donald Trump rejected Iran’s response to a U.S. peace proposal, calling it ‘TOTALLY UNACCEPTABLE,’ raising concerns the conflict could drag on.
Investors are awaiting April U.S. inflation data (CPI) and retail sales figures. These reports will help assess inflationary pressures from the US-Iran conflict and consumer spending habits, influencing expectations for Federal Reserve interest rate decisions.
Despite cautious trading, U.S. equities have seen a strong run, with the S&P 500 and Nasdaq posting their sixth consecutive weekly gain and ending at fresh record highs. This rally was partly fueled by a stronger-than-expected jobs report.
Last week, the S&P 500 and Nasdaq Composite advanced 2.33% and 4.51%, respectively.
In the Middle East, hopes of a near-term peace deal between the US and Iran faded after US President Donald Trump rejected Iran’s response to a US peace proposal, raising concerns that the 10-week-old conflict could drag on and continue to disrupt shipping through the Strait of Hormuz.
Iran on Sunday reportedly released a proposal to end the war on all fronts, which included a demand for compensation for war damages and emphasised Iranian sovereignty over the Strait of Hormuz.
On the earnings front, major US companies scheduled to report results this week include Cisco and Applied Materials. Heavyweights Nvidia and Walmart are due to report results later this month.
Investors are also awaiting April US inflation data, due on Tuesday, for further signs of how rising oil prices are feeding into broader price pressures across the economy.
Last week’s data showed that US employment increased more than expected in April, while the unemployment rate remained steady at 4.3%, pointing to continued resilience in the labour market. The stronger labour market helped fuel the recent rally but also complicated expectations for aggressive interest rate cuts by the Federal Reserve.
Meanwhile, Trump is scheduled to arrive in Beijing on Wednesday and is expected to discuss Iran, among other topics, with Chinese President Xi Jinping, Reuters reported, citing US officials.
Brent crude rebounds to $107
Donald Trump’s rejection of Iran’s proposal sent crude oil prices higher amid fears that the closure of the Strait of Hormuz could persist for longer.
Brent crude futures surged $4.6 to $106.90 per barrel after rallying 3.3% in the previous session, while WTI crude futures crossed the $100-per-barrel mark, touching an intraday high of $100.37.
The rebound in oil prices has revived concerns that escalating tensions in the Middle East could once again spill over into inflation, supply chains, and broader market volatility.
The correlation between oil prices and stock markets has also turned positive over the past two weeks, meaning the two asset classes are now more likely to move in tandem rather than in opposite directions — a reversal from the trend seen through most of the conflict so far.
Iran has effectively shut the Strait of Hormuz, disrupting a key corridor that typically handles nearly one-fifth of the world’s oil and gas shipments.
(With inputs from Reuters)
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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