The US stock futures traded modestly higher on Monday, 29 June, as investors returned to beaten-down technology stocks following last week’s sharp rotation. A busy week of economic data releases and the annual gathering of central bankers in Portugal is expected to set the tone for global markets.
Futures tied to the S&P 500 rose 0.08%, while Nasdaq 100 futures gained 1.1% and Dow Jones Industrial Average futures advanced 0.4%.
Last week, all three major US indices ended in the red, with the Nasdaq 100 plunging 4.3%, its second-worst weekly performance of the quarter, as investors booked profits in technology and semiconductor stocks following reports that OpenAI could delay its initial public offering (IPO).
The sharp correction has attracted bargain hunters, with investors selectively returning to AI-related stocks despite renewed geopolitical tensions in the Middle East.
“US futures are pointing higher this morning, with the Nasdaq 100 expected to outperform after investors stepped back into beaten-down AI and semiconductor stocks. The rebound comes just days after technology shares suffered one of their sharpest pullbacks in months, raising questions about whether the AI rally was beginning to lose steam,” said domestic brokerage firm Vested Finance.
Middle East tensions back in focus
Hostilities between the US and Iran resurfaced over the weekend. The latest exchange of attacks began on Thursday when Iran targeted a container ship, prompting US strikes the following day.
However, both sides have agreed to halt military action for now, allowing commercial vessels to move freely through the region before peace talks resume later this week, Bloomberg reported, citing a US official familiar with the matter.
Focus shifts to US economic data
The latest developments in the Middle East come after last week’s US inflation data, which, while elevated, broadly matched analysts’ expectations. Richmond Federal Reserve President Tom Barkin said on Sunday that inflation remains too high, although he sees tentative signs that price pressures could moderate in the coming months.
Investors will now closely watch the June ADP private payrolls report and the US nonfarm payrolls data later this week for fresh clues on the Federal Reserve’s interest-rate path.
“Despite signs that inflation has cooled from last year’s highs, several Fed officials continue to argue that price pressures remain elevated. Money markets are still pricing in the possibility of another rate hike later this year, making every major economic data release a potential market mover,” said Vested Finance.
Crude oil hovers near four-month lows
Crude oil prices remained near their lowest levels since late February after the US and Iran agreed to halt hostilities. Brent crude traded above $72 a barrel after paring an earlier gain of as much as 1.9%, while West Texas Intermediate hovered around $70 a barrel.
Recent media reports showed that shipping traffic through the Strait of Hormuz picked up last week, adding millions of barrels of crude to the global market. Key Middle Eastern producers, including the United Arab Emirates, Kuwait, and Qatar, have also reportedly increased oil production.
Saudi Arabia has also ramped up crude exports, reopening its Persian Gulf ports that had been disrupted during the Iran conflict while increasing loadings at its Red Sea terminals, which it has used to bypass the Strait of Hormuz, according to a Bloomberg report.
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