US stock futures edged lower on Monday as renewed tensions in the Middle East unsettled investors and sent crude oil prices higher, raising concerns over inflation and global economic growth.
Nasdaq futures suffered the biggest loss, with S&P 500 and Dow Jones Industrial Average futures indicating the market will open lower as investors weighed the impact of rising energy prices amid uncertainty over the interest rate outlook.
Oil prices increased amid growing tensions between the United States and Iran. Concerns about potential oil supply disruptions have arisen due to the strategically located Strait of Hormuz, which is among the most active oil transportation routes worldwide.
Brent crude oil has been hovering near $79 per barrel, while West Texas Intermediate has exceeded $74 per barrel. Increased oil prices have caused inflation concerns.
Tech and semiconductor stocks continued to underperform as investors cut positions in growth sectors. Increasing bond rates have contributed to weakness in tech stocks due to their sensitivity to rate changes.
Despite geopolitical and market uncertainties, investors are preparing for yet another busy week on Wall Street. Several big US banks are expected to report earnings next week, kicking off the earnings season. Market participants will watch how tech firms perform during earnings in the upcoming days.
Moreover, investors will consider figures on US inflation and statements by Fed Chair Kevin Warsh, which may have a strong impact on market expectations for further Fed action. Any indications of inflation persistence, especially following the oil price hike, may add to the list of reasons to maintain high interest rates.
For now, investors are trying to weigh geopolitical influences against company earnings and economic data. It seems that all these issues will play an important role in global markets in the coming days.