Futures Pointing To Continued Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower open on Tuesday, with stocks likely to see further downside after moving mostly lower over the two previous sessions.

A continued spike by the price of crude oil is likely to weigh on Wall Street amid lingering concerns about the conflict in the Middle East.

U.S. crude oil futures are currently jumping by 2.5 percent on the day after surging by nearly 3 percent in the previous session.

The increase in crude oil prices has led to renewed concerns about the outlook for inflation and the possibility of an interest rate hike by the Federal Reserve at its next meeting later this month.

Worries about higher interest rates have also contributed to an extended advance by treasury yields, with the yield on the benchmark ten-year note reaching its highest level since January 2025.

“Long-term US yields are still historically high having risen last week despite Treasury’s expanded buyback programme, suggesting the pressure extends beyond expectations for Fed policy,” Daniela Hathorn, Senior Market Analyst at Capital.com.

She added, “Heavy government borrowing, elevated term premium and growing competition for capital continue to underpin yields, creating a less comfortable environment for highly valued equities.”

Stocks moved mostly lower during trading on Monday, extending the pullback seen over the course of last Friday’s session. The major averages regained some ground in the latter part of the trading day but still closed in negative territory.

The Dow slid 374.09 points or 0.7 percent to 53,185.90, while the S&P 500 fell 25.62 points or 0.3 percent to 7,686.14. The tech-heavy Nasdaq posted a more modest loss, edging down 31.53 points or 0.1 percent to 26,370.89.

The continued weakness on Wall Street came amid concerns about a re-escalation of the military conflict in the Middle East following a period of relative calm.

Over the weekend, the U.S. and Iran traded strikes for the first time in over a month, contributing to a jump in crude oil prices.

U.S. crude oil futures surged by nearly 3 percent after the U.S. attacked two Iranian rocket launchers on Larak Island and Iran retaliated by launching an attack on two U.S. bases in Jordan.

The sharp increase in crude oil prices contributed to renewed worries about the outlook for inflation ahead of next month’s Federal Reserve meeting.

According to CME Group’s FedWatch Tool, the chances the central bank will raise interest rates by a quarter point have jumped to 63.9 percent following Fed Chairman Kevin Warsh’s hawkish remarks last Friday.

Treasury yields subsequently moved notably higher on the day, with the yield on the benchmark ten-year note reaching its highest levels in well over a year.

However, traders seemed somewhat reluctant to make more significant moves ahead of the release of some key economic data in the coming days, including the monthly jobs report on Friday.

Airline stocks moved sharply lower amid the surge in crude oil prices, dragging the NYSE Arca Airline Index down by 3.2 percent to its lowest closing level in over three months.

Interest rate-sensitive housing and utilities stocks also saw considerable weakness, with the Philadelphia Housing Sector slumping by 1.9 percent and the Dow Jones Utility Average falling by 1.4 percent.

Gold and retail stocks also showed significant moves to the downside, while energy stocks moved notably higher along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are jumping $2.18 to $87.94 a barrel after surging $2.36 to $85.76 a barrel on Monday. Meanwhile, after slumping $48.40 to $4,481.50 an ounce in the previous session, gold futures are tumbling $69.80 to $4,411.70 an ounce.

On the currency front, the U.S. dollar is trading at 160.18 yen compared to the 159.73 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1590 compared to yesterday’s $1.1616.

Asia

Asian stocks retreated on Tuesday as rising U.S.-Iran tensions pushed Brent prices above $91 a barrel and added to worries about inflation and interest rates.

Brent crude futures rose more than 1 percent toward $92 a barrel on concerns about further disruptions to energy supplies through the Strait of Hormuz.

An Iranian official dismissed as “laughable” AI-gen videos shared by U.S. President Donald Trump showing Iran’s oil hub Kharg Island being “blown to smithereens” with no further details.

Iranian President Masoud Pezeshkian said his country was not seeking war but will never remain silent in the face of aggression.

The U.S. dollar weakened, while gold prices fell toward $4,400 an ounce on growing expectations of a Federal Reserve rate hike.

China’s Shanghai Composite Index slipped 0.2 percent to 3,979.89 after a choppy session. Chinese manufacturing activity continued to expand in August, and at a faster rate, the latest survey from Caixin revealed today, with a manufacturing PMI score of 51.5, up from 50.9 in July.

Hong Kong’s Hang Seng Index fell 0.9 percent to 25,329.73 in the wake of renewed hostilities between the U.S. and Iran.

Japanese markets trimmed early losses to end slightly lower despite strong performance from tech heavy weights.

Japanese corporate spending on plant and equipment rose 1.6 percent in April-June year-on-year, official data showed today, strengthening the case for a BoJ rate hike at the upcoming September 17-18 policy meeting.

The Nikkei 225 Index dipped 0.2 percent to 66,215.34, while the broader Topix Index closed 0.6 percent higher at 4,181.86. SoftBank Group shares rose 1.2 percent and Kioxia Holdings advanced 2 percent.

Seoul stocks swung between gains and losses before ending on a positive note. The Kospi Index closed 0.2 percent higher at 6,835.80, extending gains for a second consecutive session despite escalating tensions in the Middle East.

Market bellwether Samsung Electronics rose 0.4 percent and its chipmaking rival SK Hynix gained 1.1 percent after government data showed semiconductor shipments hit a record high in August.

Australian markets ended marginally lower, with banks and technology stocks leading losses on concerns over rising oil prices and higher bond yields.

The benchmark S&P/ASX 200 Index edged down 0.1 percent to 9,066.70, while the broader All Ordinaries Index settled 0.1 percent lower at 9,260.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index fell 0.9 percent to 13,786.90 ahead of the RBNZ rate decision due on Wednesday.

Europe

European stocks have declined on Tuesday as rising oil prices and bond yields stoke worries about inflation and interest rate hikes.

A global bond rout deepened, driving sovereign borrowing costs across Europe. Germany’s 30-year government bond yield hit a fresh 15-year high, while France’s 30-year yield touched its highest level since 2008 as traders assessed Middle East tensions and awaited key U.S. labor market data this week for additional clues on the Federal Reserve’s rate trajectory.

As inflation rises on elevated energy prices, the European Central Bank (ECB) is likely to raise its key interest rates by 25 basis points at its policy meeting on September 9-10.

The German DAX Index is down by 1 percent, the U.K.’s FTSE 100 Index is down by 0.6 percent and the French CAC 40 Index is down by 0.2 percent.

Ashtead Technology Holdings has slumped in London after the subsea equipment rental specialist reported a 7 percent fall in first-half EBITA earnings.

Retail giant Frasers has also moved to the downside after announcing it was reviewing its support for Hugo Boss’ supervisory board Chair Stephan Sturm.

AstraZeneca has also declined despite announcing positive high-level results from the SANOVO Phase III trial in China.

Advertising group WPP has also dropped as it announced plans to eliminate up to 1,000 additional positions by the end of the year.

Partners Group Holding has plunged after the Swiss private equity firm replaced chief executive officer David Layton following fund turmoil.

Meanwhile, shares of energy companies like TotalEnergies, BP Plc and Shell rose as Brent prices climbed toward $92 a barrel on concerns about prolonged disruptions to energy flows through the Strait of Hormuz.

German beauty, fragrance, and flavor giant Symrise has risen after it agreed to sell AmeriTerpenes LLC, its terpene ingredients business, to international private equity investor Mutares SE & Co. KGaA.

U.S. Economic News

The Institute for Supply Management is due to release its report on manufacturing activity in the month of August at 10 am ET. The ISM’s manufacturing PMI is expected to dip down to 55.2 in August from 55.6 in July, although a reading above 50 would still indicate growth.

Also at 10 am ET, the Labor Department is scheduled to release its report on job openings in the month of July. Job openings are expected to decrease to 7.30 million in July from 7.36 million in June.

The Commerce Department is also due to release its report on construction spending in the month of July at 10 am ET. Construction spending is expected to inch up by 0.1 percent in July after edging down by 0.1 percent in June.