United States stock futures climbed on Sunday evening (Monday AEST), while oil prices dropped sharply after the United States and Iran paused military operations over the weekend, easing some geopolitical pressure ahead of a major week for corporate earnings and the Federal Reserve's latest policy decision.
By 10:10 am AEST (12:10 am GMT), Dow futures were up 0.7%, S&P 500 futures gained 0.9%, and Nasdaq 100 futures advanced 1.4%, pointing to a stronger open on Wall Street.
Oil prices declined after Iran said it would suspend attacks as long as the U.S. maintains its pause in military operations following nearly two weeks of escalating strikes.
International benchmark Brent crude futures fell more than 5% to around US$92 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 5% to approximately $85 a barrel.
However, tensions remained elevated elsewhere after Ukraine reportedly struck an Iranian commercial vessel in the Caspian Sea. Tehran condemned the incident as a "hostile and criminal act", adding another layer of uncertainty to regional geopolitical risks.
U.S. equities posted a mixed session on Friday; the Dow Jones Industrial Average gained 0.5%, the S&P 500 edged 0.1% higher, while the Nasdaq Composite fell 0.6% as investors reduced exposure to technology stocks amid concerns over artificial intelligence investment levels.
The week ahead will bring a wave of closely watched earnings reports from major technology companies, including Amazon, Apple, Meta Platforms and Microsoft, as investors assess whether aggressive artificial intelligence spending can deliver sufficient returns.
Attention will also turn to the Federal Reserve's interest rate decision on Wednesday (Thursday AEST). Markets are currently pricing in a 36.3% probability of a 25-basis-point rate increase, according to the CME Group FedWatch Tool, as investors weigh inflation risks and the outlook for monetary policy.
