Key insights
- Renewed US-Iran tensions, including the alleged seizure of an Iranian tanker and claims of the Strait of Hormuz closure, have negatively impacted US stock futures. Rising oil prices, though still below $100, contribute to inflation concerns. While Cleveland-Cliffs earnings and SK Hynix's AI chip production are noted, geopolitical uncertainty is the dominant driver, creating a bearish sentiment for US equities.
Investing.com - Futures linked to the main U.S. indices tick lower amid a reigniting dispute between the U.S. and Iran. American forces are said to have seized an Iranian tanker, while Tehran claims that it has shuttered the Strait of Hormuz again because of an ongoing U.S. blockade. Oil climbs, but remains below $100 a barrel. Earnings from steelmaker Cleveland-Cliffs are ahead, while SK Hynix says it has begun mass production of a next-generation memory module designed for Nvidia’s advanced artificial intelligence chip.
- Futures drop
U.S. stock futures fell on Monday, as investors gauged renewed tensions between the U.S. and Iran which dented hopes for a reopening of the Strait of Hormuz.
By 03:29 ET (07:29 GMT), the Dow futures contract had shed 313 points, or 0.6%, S&P 500 futures had dropped by 37 points, or 0.5%, and Nasdaq 100 futures had dipped by 141 points, or 0.5%.
The main averages on Wall Street advanced by more than 1% to end the prior week, touching all-time highs. Bolstering sentiment were announcements from both U.S. and Iranian officials that the Strait of Hormuz, a critical waterway for a fifth of the world’s oil, was once again available to commercial shipping traffic after weeks of closure.
Optimistic rhetoric also surrounded a potential deal to extend a ceasefire between the U.S. and Iran which is due to expire later this week, fueling anticipation that the conflict may be winding down to a permanent conclusion.
Oil prices sank sharply, soothing some worries that a potential bout of inflation could force global central banks to consider interest rate hikes -- although crude still remained above pre-war levels.
- Trump says U.S. forces have seized Iranian tanker
Yet, in a recurring theme of the Iran war, uncertainty now swirls around these once-buoyant peace prospects as the new trading week gets underway.
President Donald Trump said an Iranian-flagged cargo ship had been seized by American forces, claiming the vessel was attempting to run a U.S. blockade of Iran’s ports and coast. Tehran responded by threatening to retaliate and suggested that it would not be taking part in possible negotiations with the U.S. this week.
Trump also warned that the U.S. could “blow up all power plants and bridges” in Iran if Tehran failed to agree to a peace deal.
Following a series of conflicting statements from Iranian officials in recent days, it is also now unclear whether a weekslong closure of the Strait of Hormuz had indeed been lifted, or if Iran had once again blocked the bottleneck. Data from Kpler showed more than 20 ships crossed the strait on Saturday, the most since March 1, although Iran has declared that the chokepoint has been shuttered once again because of the U.S. blockade.
"[D]evelopments over the weekend suggest the thaw has been short-lived," analysts at ING said in a note to clients.
- Oil surges once again
So too, it seems, was Friday’s cratering in oil prices.
By 03:59 ET, Brent crude futures, the global oil benchmark, had climbed by 5.9% to $95.67 a barrel, while U.S. West Texas Intermediate crude futures had increased by 6.2% to $87.73 a barrel.
"Oil prices are being whipsawed by developments in the Middle East once again, with what appears to be de-escalation quickly turning to re-escalation," the ING analysts said.
A surge in the cost of oil has been one of the main focal points for financial markets since the outbreak of the war in late February, providing the impetus for warnings over a spike in inflationary pressures and slowing economic growth around the world.
As a result, swings in crude have had a cascading effect on a wide-range of assets. Gold, for instance, has partially retraced a recovery last week, as investors fret that an energy-driven inflation jump could lead to a higher-for-longer interest rate environment, which does not bode well for non-yielding bullion.
- Cleveland-Cliffs to report
A slew of corporate results scheduled to be released this week could shed more light on how the Iran war is impacting the overall business outlook.
On Monday, steelmaker Cleveland-Cliffs will headline a quiet docket before the opening bell.
The returns will come days after the World Steel Association slashed its forecast for global crude steel demand this year, partly because of a war-linked downturn in Middle East consumption.
Later this week, analysts will be keeping tabs on earnings from groups like credit-card provider American Express, chipmaker Intel, healthcare giant UnitedHealth, defense player RTX Corporation, and electric vehicle manufacturer Tesla.
- SK Hynix begins mass production of memory module for Nvidia Vera Rubin
SK Hynix said on Monday it had begun mass production of an advanced memory module designed for Nvidia’s cutting-edge Vera Rubin artificial intelligence chip.
The South Korean company said it started mass production of the 192GB SOCAMM2, a next-generation memory module which aims to provide AI server functionality with less power.
SOCAMM2 products are designed for Nvidia Vera Rubin, SK Hynix said in a statement. The company said the new products will “fundamentally resolve the memory bottlenecks encountered during the training and inference of large language model(s).”
SK Hynix is one of the world’s largest memory chip makers, and is a key supplier of advanced memory to Nvidia.
Shares of the memory chip maker rose, helping drive a 0.4% uptick in Korea’s KOSPI index. Rival Samsung Electronics edged down.