Futures Pointing To Initial Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to regain ground following the sell-off seen last Friday.

Traders may look to pick up stocks at somewhat reduced levels following the previous session’s nosedive, which came after Israel launched a series of airstrikes against Iran.

While the clash between Israel and Iran continued over the weekend, traders appear optimistic the conflict will remain relatively contained.

“Despite a weekend of violence between the two countries, investors showed no signs of panicking, judging by movements in financial markets on Monday,” said Russ Mould, investment director at AJ Bell.

However, he added, “The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.”

The upward momentum on Wall Street also comes as traders look ahead to a meeting of major world leaders at the G7 summit in the Canadian Rockies later this week.

Traders will be looking to the meeting for signs of progress on trade deals ahead of the end of President Donald Trump’s 90-day pause on “reciprocal tariffs” early next month.

The Federal Reserve’s latest monetary policy announcement is also likely to attract attention from traders in the coming days.

While the central bank is widely expected to leave interest rates unchanged, the accompanying statement and Fed officials’ latest projections may provide more clarity about the outlook for rates.

After moving modestly higher over the course of the Thursday’s session, stocks pulled back sharply during trading on Friday. The major averages all moved significantly lower, with the Dow and the S&P 500 pulling back well off Thursday’s three-month closing highs.

The major averages staged a recovery attempt in late morning trading after an early slump but moved back to the downside as the day progressed.

The Dow plummeted 769.83 points or 1.8 percent to 42,197.79, the Nasdaq plunged 255.66 points or 1.3 percent to 19,406.83 and the S&P 500 tumbled 68.29 points or 1.1 percent to 5,976.97.

With the steep drop on the day, the major averages also moved lower for the week. The Dow slumped by 1.3 percent, the Nasdaq slid by 0.6 percent and the S&P 500 fell by 0.4 percent.

The sell-off on Wall Street came amid geopolitical concerns after Israel launched a series of airstrikes against Iran earlier this morning.

The Israeli airstrikes targeting nuclear facilities and ballistic missile factories killed at least three of Iran’s senior military leaders.

Iran retaliated by launching more than 100 drones toward Israeli territory, which the Israel Defense Forces said they are working to intercept.

The attacks led the worries about a wider conflict, and the price of crude oil spiked amid concerns about supply disruptions.

Responding to the news in a post on Truth Social, President Donald Trump urged Iran to reach a nuclear agreement before an escalation of the attacks.

“There has already been great death and destruction, but there is still time to make this slaughter, with the next already planned attacks being even more brutal, come to an end,” Trump said.

“Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire,” he added. “No more death, no more destruction, JUST DO IT, BEFORE IT IS TOO LATE.”

Meanwhile, traders largely shrugged off a report from the University of Michigan showing a substantial improvement by consumer sentiment in the month of June.

The University of Michigan said its consumer sentiment index surged to 60.5 in June after holding at 52.2 in May. Economists had expected the index to rise to 53.5.

Airline stocks turned in some of the market’s worst performances on the day, dragging the NYSE Arca Airline Index down by 4.3 percent to its lowest closing level in over a month.

Substantial weakness was also visible among computer hardware and semiconductor stocks, with the NYSE Arca Computer Hardware and Philadelphia Semiconductor Index plunging by 2.7 percent and 2.6 percent, respectively.

Housing, networking and financial stocks also saw considerable weakness on the day, while energy and gold stocks bucked the downtrend.

Commodity, Currency Markets

Crude oil futures are slumping $1.69 to $71.29 a barrel after spiking $4.94 to $72.98 a barrel last Friday. Meanwhile, after surging $50.40 to $3,452.80 an ounce in the previous session, gold futures are falling $20.90 to $3,431.90 an ounce.

On the currency front, the U.S. dollar is trading at 144.23 yen versus the 144.17 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1573 compared to last Friday’s $1.1549.

Asia

Asian stocks ended mostly higher on Monday as investors reacted to escalating tensions in the Middle East and a mixed bag of data from China.

The dollar held steady on heightened Middle East geopolitical tensions, as the conflict between Iran and Israel entered its fourth day, with the number of deaths mounting on both sides.

Crude oil prices steadied after surging 7 percent on Friday, while gold dipped toward $3,400 per ounce.

China’s Shanghai Composite Index rose 0.4 percent to 3,383.73 and Hong Kong’s Hang Seng Index closed up 0.7 percent at 24,060.99.

Chinese factory output growth hit a six-month low in May, while retail sales picked up steam, signaling potential resilience in consumer demand amid a fragile truce in the country’s trade war with the United States.

Japanese markets rallied as a weaker yen boosted export-related stocks. The Nikkei 225 Index jumped 1.3 percent to 38,311.33 ahead of the Bank of Japan’s upcoming policy meeting, with the central bank widely expected to keep interest rates unchanged. The broader Topix Index settled 0.8 percent higher at 2,777.13.

Seoul stocks surged, driven by big gains the defense, energy and IT sectors. The Kospi shot up 1.8 percent to 2,946.66.

Hanwha Systems soared 18 percent and Doosan Enerbility spiked 9.2 percent, while SK Hynix, HD Hyundai Electric, Hyundai Rotem added 5-6 percent.

Australian markets gave up early gains to end on a flat note. Energy stocks rallied on higher oil prices, offsetting weak performance across gold miners.

Oil & gas producer Santos soared nearly 11 percent following a $18.7 billion takeover bid by a consortium led by a unit of Abu Dhabi’s National Oil Company.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 1.1 percent to 12,690.13, buoyed by gains in energy-related stocks.

Europe

European stocks have moved higher on Monday as world leaders gathered in Canada for the G7 summit, which will address global security, economic resilience, and tech cooperation. Discussions to resolve the Middle East crisis will also be a top priority.

The Israel-Iran conflict entered its fourth day, with fresh missile exchanges. Iranian strikes on Tel Aviv, Haifa, and Petah Tikva killed at least five, injured dozens, and damaged key infrastructure, including a power plant.

Traders are also looking ahead to monetary policy decisions from the Federal Reserve, the Bank of Japan and the Bank of England later in the week.

While the French CAC 40 Index is up by 1.1 percent, the German DAX Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

Entain shares have soared. The sports betting and gaming group hiked the annual earnings outlook for its U.S. joint venture BetMGM.

Spectris, a precision instrumentation and controls company, has also surged after rejecting a second takeover proposal from private equity firm KKR.

Gucci parent Kering has also moved sharply higher after reports that it is close to appointing Renault’s ex-boss Luca de Meo as its new CEO.

Meanwhile, Renault shares have slumped after Nissan CEO Ivan Espinosa announced plans to reduce the company’s stake in its French partner.

U.S. Economic News

According to a report released by the Federal Reserve Bank of New York on Monday, New York manufacturing activity fell for a fourth consecutive month in June.

The New York Fed said its general business conditions index slid to a negative 16.0 in June from a negative 9.2 in May, with a negative reading indicating contraction. Economists had expected the index to climb to a negative 5.5.

Meanwhile, the New York Fed said firms turned optimistic about the outlook, with the future general business conditions index turning positive for the first time since March.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $13 billion worth of twenty-year bonds.