US stock futures remained largely flat on Tuesday, 11 August, as uncertainty over a potential peace deal in the Middle East dampened risk appetite, while higher oil prices fuelled fresh concerns over inflation.
Futures linked to the S&P 500 rose 0.1%, while Nasdaq-100 futures gained 0.3%. Futures tied to the Dow Jones Industrial Average added 34 points, or 0.1%.
The uncertainty over the reopening of the Strait of Hormuz continued to weigh on sentiment. President Donald Trump issued sweeping new demands on Iran, including compensation for people killed by the Islamic Republic in conflicts, after Tehran reiterated its calls for reparations as part of negotiations to wind down the conflict.
The developments come as US stockpiles of key weapons have dwindled, while stop-start negotiations appear to have stalled again. Trump, however, has maintained that continued pressure could eventually lead to a breakthrough.
Iran has refused to back down from its demands that the US end its blockade of Iranian ports and fulfil other conditions before Tehran considers reopening the Strait of Hormuz, the Associated Press reported.
Meanwhile, Trump also claimed on Monday that the US has “100% control” of the Strait of Hormuz, although the situation remains complex. He also said the US Navy’s blockade of the strait is preventing Iran from selling its oil on international markets, effectively putting further pressure on the Iranian economy, according to the AP report.
The uncertainty around the strait has also pushed oil prices higher, rekindling inflation concerns. This could further complicate the Federal Reserve’s policy outlook, particularly after softer-than-expected US jobs data last week tempered expectations of an immediate rate hike.
Investors are now turning their attention to Wednesday’s US consumer price index (CPI) report, which could provide fresh clues about the path of Federal Reserve interest rates. The data assumes added importance after the weaker-than-expected jobs report raised questions over the central bank’s policy trajectory.
The US consumer price index is expected to have risen 0.1% in July, following a 0.4% decline in the previous month, according to the median estimate in a Bloomberg survey of economists ahead of Wednesday’s Bureau of Labor Statistics release.
AI boom fuels race for capital
US investment giants, including Apollo Global Management, Blackstone, BlackRock and Brookfield Asset Management, are partnering with Nvidia to source $500 billion in financing for artificial intelligence infrastructure.
Nvidia CEO Jensen Huang said in a CNBC interview that he approached only six firms for the commitment, and none of them turned him down, highlighting strong investor appetite for AI infrastructure despite rising capital requirements.
Meanwhile, Intel raised $20 billion through an upsized share sale, about a third more than the company had initially targeted when it announced the deal on Monday.
“Companies are spending billions on data centres, chips and other infrastructure. That is great news for companies selling this equipment. But it also means they are competing for capital with governments and other businesses. The AI boom is boosting earnings. But it is also increasing the demand for money,” domestic brokerage firm Vested Finance said.
Oil extends five-session winning streak
Crude oil prices extended their winning streak to a fifth straight session on Tuesday, with Brent crude crossing $90 a barrel after surging 5% in the previous session, as President Donald Trump lashed out at Iran’s demands for compensation as part of negotiations to wind down the conflict.
Trump had signalled on Sunday that he was prepared to allow economic pressure on Iran to build rather than launch fresh strikes. Meanwhile, US benchmark WTI crude futures gained another 3% to $84.70 a barrel, extending their gains for a fifth consecutive session.
(With inputs from Bloomberg)
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