U.S. Stocks May See Initial Weakness As Crude Oil Prices Rebound

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to move back to the downside after ending last week’s trading on an upbeat note.

The downward momentum on Wall Street comes amid a substantial rebound by the price of crude oil, which has been a key driver of trading in recent sessions.

U.S. crude oil futures are surging by 2.6 percent after tumbling by 2.3 percent during last Friday’s trading after President Donald Trump rejected Iran’s conditional proposal for reopening the Strait of Hormuz.

President Trump has rejected Iran’s proposal for a seven-day ceasefire and has told aides he expects to resume bombing Iran after the November midterms, U.S. officials said.

Iran’s proposal would have purportedly reopened the strait and resumed nuclear talks in return for the U.S. lifting its blockade of Iranian ports.

A report from the Wall Street Journal citing U.S. officials said Trump has told aides he expects to resume bombing Iran after the November midterm elections.

Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

On Wednesday, the Commerce Department is scheduled to release its report on personal income and spending in the month of August, which includes the Federal Reserve’s preferred inflation readings.

The inflation data could have a significant impact on the outlook for interest rates ahead of the Fed’s next monetary policy meeting late next month.

Stocks fluctuated early in the session on Friday but moved mostly higher over the course of the trading day. The major averages all finished the day in positive territory after ending the previous session roughly flat.

The Dow advanced 478.64 points or 0.9 percent to 51,828.62, bouncing off its lowest closing level in over three months. The Nasdaq climbed 129.34 points or 0.5 percent to 27,068.72 and the S&P 500 rose 39.28 points or 0.5 percent to 7,743.41.

For the week, the tech-heavy Nasdaq surged by 2.1 percent, the S&P 500 jumped by 1.2 percent and the Dow increased by 0.3 percent.

The strength that emerged on Wall Street came amid a significant pullback by the price of crude oil, which had surged over the two previous sessions.

U.S. crude oil futures have tumbled by more than 2 percent on the day after spiking by 4.5 percent over the past two days.

The sharp pullback by crude oil prices came as traders reacted to the latest reports about a potential deal to end the prolonged conflict between the U.S. and Iran.

New reports indicate that Iran has submitted a proposal to the U.S. to end the war and reopen the Strait of Hormuz within seven days if Washington accepts its conditions.

Overall buying interest was somewhat subdued, however, as treasury yields saw further upside after surging over the two previous sessions.

The yield on the benchmark ten-year note pulled back off its highs of the session but still ended the day at its highest closing level since July 2007.

The continued advance by treasuries came as worries about the outlook for inflation have helped solidify expectations that the Federal Reserve will continue raising interest rates next month.

Airline stocks moved sharply higher amid the steep drop by the price of crude oil, with the NYSE Arca Airline Index soaring by 3.7 percent to its best closing level in over a month.

Considerable strength was also visible among computer hardware stocks, as reflected by the 2.3 percent jump by the NYSE Arca Computer Hardware Index.

Semiconductor, software and banking stocks also turned in strong performances on the day, while natural gas stocks moved lower along with the price of the commodity.

Commodity, Currency Markets

Crude oil futures are surging $2.40 to $94.81 a barrel after plunging $2.20 to $92.41 a barrel last Friday. Meanwhile, after rising $23.20 to $4,321.20 an ounce in the previous session, gold futures are plummeting $138.20 to $4,183 an ounce.

On the currency front, the U.S. dollar is trading at 157.17 yen versus the 157.26 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.369 compared to last Friday’s $1.1391.

Asia

Asian stocks ended mixed on Monday as Middle East tensions persisted, hawkish signals from Federal Reserve policymakers bolstered the case for another Fed rate hike this year, and new data showed China’s industrial profit growth slowed further in August.

Oil prices and bond yields extended their climb as U.S. President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz and signaled possible new military strikes after the midterm elections.

While Trump said he expects negotiations to resume this week. Iran said it would not soften its conditions. Iran’s Foreign Minister Abbas Araghchi expressed hopes for a diplomatic solution but warned the country is prepared for war with the United States to resume.

The U.S. dollar index was on the defensive but held near a two-month high, while gold tumbled nearly 3 percent toward $4,150 an ounce on higher yields and hawkish bets.

Brent crude prices soared nearly 3 percent to trade above $107 a barrel in Asian trading on renewed concerns about energy supply.

China’s Shanghai Composite Index tumbled 1.7 percent to 3,823.62 after data showed China’s industrial profits grew at their weakest pace this year in August, expanding just 4.2 percent from a year earlier.

Hong Kong’ Hang Seng Index rose 0.5 percent to 24,642.51, rebounding from three consecutive sessions of losses as China confirmed a two-month extension of the trade truce with the U.S. following a recent summit.

Japanese markets closed lower after a gauge of Japanese service-sector inflation rose at the fastest annual pace in more than two years in August and minutes from the Bank of Japan’s July 30 to 31 meeting revealed broad agreement on rising inflation risks, raising speculation the central bank could raise its benchmark rate for a second straight month when the board meets in October.

The Nikkei 225 Index closed 0.7 percent lower at 65,877.62, giving up early gains and snapping a five-session winning streak. The broader Topix Index settled 0.4 percent lower at 4,112.

Memory-chip maker Kioxia Holdings and electronics firm Ibiden both slumped over 4 percent ahead of quarterly results from U.S. memory-chip maker Micron Technology due this week.

Seoul stocks plummeted as trading resumed after a holiday. The Kospi Index plunged 2.7 percent to 6,889.74, with technology stocks coming under heavy selling pressure on concerns about a sharp rise in long-term U.S. Treasury yields and worsening sentiment toward parts of the artificial intelligence supply chain.

Samsung Electronics slumped 5.4 percent and SK Hynix lost a little over 5 percent in their first trading session after the Chuseok holiday.

Australian markets edged up slightly, with financials rising ahead of a widely expected 25-bps RBA rate hike on Tuesday. The benchmark S&P/ASX 200 Index inched up 0.2 percent to 8,679.70, while the broader All Ordinaries Index finished marginally higher at 8,850.70.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended 0.1 percent higher at 13,830.68, halting some of the losses from the previous session.

Europe

European stocks have moved mostly higher on Monday despite concerns over rising oil prices and elevated bond yields after U.S. President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the war.

The French CAC 40 Index is up by 0.6 percent, the U.K.’s FTSE 100 Index is up by 0.5 percent and the German DAX Index is up by 0.2 percent.

The euro hovered near a two-month low as investors braced for speeches from ECB President Chritine Lagarde and Bank of England Deputy Governor Dave Ramsden later in the day.

In corporate news, SuedZucker shares have. The German sugar producer raised its revenue and operating core earnings forecasts for the 2026/27 financial year, citing rising demand for biofuels.

Shares of homebuilders Barratt Redrow, Taylor Wimpey and Persimmon have also spiked in London after the U.K. government said it would unveil a scheme to help first-time buyers in next month’s budget.

Meanwhile, West Africa-focused oil and gas explorer Tullow Oil has tumbled after widening its first-half net loss due to higher refinancing costs.

Ladbrokes owner Entain has also slumped after cutting its revenue outlook following Brazil’s executive-order ban on line sports betting and gaming.

U.S. Economic News

No major U.S. economic data is scheduled to be released today.