New York City, NY – Stock futures showed slight gains ahead of Monday's trading session as the escalating conflict between Israel and Iran heightened concerns among investors about global economic stability. The Dow Jones Industrial Average futures inched up by 9 points, or 0.02%, while S&P 500 futures increased by 0.14%, and Nasdaq 100 futures advanced by 0.19%. This movement comes in the wake of significant tension in the Middle East, which has seen oil prices surge and market volatility increase.
The rise in oil prices was notable, with WTI crude oil futures climbing over 3% on Sunday night to exceed $75 per barrel. This increase follows Israel's recent military strike on Iran, which prompted a missile retaliation from Iran, intensifying the regional conflict. This development has led to a notable sell-off in U.S. stocks, with the Dow plunging more than 700 points last Friday. Consequently, major indexes experienced declines, positioning them in red territory for the week. Specifically, the Dow saw a decrease of 1.3%, while the S&P 500 and Nasdaq Composite fell by 0.4% and 0.6%, respectively.
The ongoing hostilities have targeted energy facilities in both nations, raising fears of further disruptions in global markets. Iran has even suggested it may close the Strait of Hormuz, a critical passage for the global oil supply. "The strikes represent the largest attack on Iranian territory since the 1980s," noted Ed Mills, a Washington policy analyst at Raymond James, highlighting the elevated risks of regional escalation.
Investors are closely watching upcoming manufacturing survey data due on Monday, preceding the Federal Reserve's interest rate decision on Wednesday. Despite President Donald Trump's pressure on Fed Chief Jerome Powell for a rate cut, Fed funds futures indicate a 97% likelihood that rates will remain unchanged. The spike in oil prices due to the Middle East conflict may diminish the probability of any monetary policy easing in the near term.
In response to the heightened geopolitical tensions, gold prices also saw a rally, as investors typically turn to the precious metal as a safe haven during periods of market uncertainty. The conflict continued over the weekend, with attacks on energy infrastructure, notably two natural gas facilities and an oil depot in Iran by Israel, leading to a further 3% increase in crude oil prices on Sunday evening.
Investors and analysts alike will be monitoring market conditions closely as geopolitical developments unfold, assessing the broader implications for global markets and economic stability.
