Key insights
- US equity futures are pointing higher, extending recent gains driven by positive sentiment around potential US-Iran diplomatic progress and strong earnings from companies like Dell. Nvidia's announcement of high-end chips for Windows PCs also supports the tech sector. However, ongoing strikes between the US and Iran introduce geopolitical uncertainty, potentially capping upside and influencing oil prices. The market is balancing optimism from tech and earnings against Middle East tensions.
Investing.com - Futures linked to the main U.S. indices point up, although an exchange of strikes between the U.S. and Iran cloud the outlook for a diplomatic efforts to resolve the conflict. Oil prices advance, hovering above pre-war levels but below recent peaks above $100, as investors eye the possibility that an agreement could unblock the Strait of Hormuz. U.S. media have said Trump has requested that some alterations be made to the deal. Nvidia has unveiled the first Windows computers to use its high-end chips as the main processing unit.
- Futures rise
U.S. stock market futures ticked higher on Monday, suggesting an extension to gains notched at the end of the prior trading week, even as new strikes in the Middle East rattled hopes for an imminent ceasefire extension deal between the U.S. and Iran.
By 03:23 ET (07:23 GMT), the Dow futures contract had risen by 54 points, or 0.1%, S&P 500 futures had climbed by 20 points, or 0.3%, and Nasdaq 100 futures had advanced by 135 points, or 0.4%.
The main averages on Wall Street gained in the prior session, logging fresh record closing highs as well as an uptick for the both the month and week. Results from Dell helped underpin the rally on Friday, with investors cheering the company’s decision to lift its annual profit and revenue forecasts. Chipmaking stocks, in particular, powered a jump in the wider tech sector.
Recent optimism that the U.S. and Iran may forge a deal eased fears that a conflict-fueled energy shock could spark a period of stagnant growth and persistent inflation, analysts at Deutsche Bank said. These hopes boosted the appeal of risk assets in May and supported a recovery in government bonds from a steep mid-month sell-off, they added.
- U.S. and Iran exchange fresh strikes
Still, in a recurring theme throughout the Iran conflict, the prospects of an imminent deal have been tempered by yet another exchange of military strikes.
The U.S. military has said it bombarded radar and drone control sites in Iran, following a move by Tehran to shoot down an American drone over the weekend, the Associated Press reported. Iran confirmed that it has launched a further strike in retaliation and Kuwait flagged that it had intercepted drone and missile fire, the AP said.
Elsewhere, Israel has pushed to expand its occupation of a section of neighboring Lebanon, responding to drone launches by Iran-aligned Hezbollah militants.
U.S. President Donald Trump has stressed that he believes Iran wants to reach an agreement, with both sides continuing to negotiate over key sticking points, particularly Tehran’s nuclear ambitions. Trump is now reviewing a proposed memorandum of understanding which would reportedly extend an ongoing ceasefire, call for shipping to restart in the Strait of Hormuz, and offer a framework for discussing Iran’s nuclear program.
Iran’s chief negotiator flagged on Sunday that Tehran would not accept an agreement that does not secure its rights.
- Brent climbs
Against the backdrop, Brent crude futures, the global oil benchmark, marched higher once again. At 03:56 ET, the contract had risen by 3.1% to $93.92 a barrel.
While the potential U.S.-Iran ceasefire extension has weighed on oil prices, the Brent contract remains well above pre-war levels. Analysts at Vital Knowledge have suggested that this is a reflection of the belief that, even if a deal is reached, shipping activity in the Strait of Hormuz is not likely to recover for months, while Iran’s stranglehold over the conduit will maintain a geopolitical risk premium in oil markets.
Oil prices have been a focal point for investors since the start of the Iran war in late February. The effective closure of the Strait of Hormuz, a vital waterway for a fifth of the world’s oil and natural gas, drove up energy prices, sparking worries over a burst of inflationary pressure hitting countries around the world.
Expectations have, in turn, grown that central banks could react to the inflation wave by raising interest rates, which may dampen some of the appeal of perceived riskier assets such as stocks.
- ISM U.S. manufacturing data ahead
The impact of the Iran war has been hovering over economic data for weeks, as investors brace for both a spike in inflation and a possible slowdown in broader growth.
On Monday, traders will have the opportunity to parse through a gauge of activity in the key U.S. manufacturing sector from the Institute for Supply Management.
The ISM manufacturing purchasing managers’ index is seen coming in at 53.3 in May, compared to 52.7 in the prior month. A level above 50 indicates expansion.
Economists also anticipate that a metric of prices paid by these business, which could shed some light on the state of inflation, will edge up to 85.3 from 84.6 in April.
- Nvidia unveils new processor for Windows PC
Nvidia has announced a new processor for Microsoft’s Windows operating platform which will be used in a line of laptops and desktop PCs.
CEO Jensen Huang unveiled the new line of "superchips" -- the RTX Spark -- during a keynote address at the COMPUTEX conference in Taiwan on Monday.
The RTX Spark will include Nvidia’s new N1X processor, which is a custom processor made with Microsoft and designed by Taiwanese firm MediaTek. The processors will be based on chip designer Arm’s platform.
Huang said the chips were aimed chiefly at running locally hosted artificial intelligence agents, and that Nvidia had collaborated with Windows on the software platform.
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