United States stock futures moved lower on Sunday night (Monday AEST) while oil prices advanced, as investors assessed developments in Middle East peace negotiations and looked ahead to a key inflation report that could shape the Federal Reserve's next policy move.
At 8:35 am AEST (10:35 pm GMT), Dow Jones futures were down 0.3%, S&P 500 futures had fallen 0.4%, and Nasdaq-100 futures were 0.5% lower.
Energy markets moved in the opposite direction, with crude oil prices rising amid renewed uncertainty surrounding the conflict involving Iran. Brent crude futures gained 1.3% to approximately US$81.62 a barrel, while U.S. West Texas Intermediate crude climbed 2.3% to around US$77.64 a barrel.
Investor sentiment remained cautious following comments from U.S. President Donald Trump, who warned on Sunday that Washington could launch fresh military strikes against Iran if its leaders did not "immediately stop their highly paid PROXIES in Lebanon from causing trouble".
Trump's remarks came as Vice President JD Vance met Iranian officials in Switzerland for a new round of negotiations aimed at preserving a fragile peace agreement between the two countries.
The talks marked the first formal discussions since earlier negotiations had been suspended.
The prospect of renewed tensions in the Middle East has added another layer of uncertainty for financial markets already grappling with questions about the outlook for U.S. monetary policy.
Despite the cautious start to the week, Wall Street finished the previous trading week on a positive note.
The three major U.S. indexes rebounded on Thursday following a sharp sell-off a day earlier that had been driven by concerns about the Federal Reserve's policy trajectory.
Technology and semiconductor stocks led the recovery, helping all three major benchmarks post weekly gains.
For the week, the Dow Jones Industrial Average rose 0.7%, while the S&P 500 advanced 0.9%. The technology-heavy Nasdaq Composite outperformed, climbing 2.4%.
U.S. markets were closed on Friday in observance of the Juneteenth holiday.
Attention now turns to inflation data due later this week, which could provide critical insight into the Federal Reserve's next steps.
Investors will closely monitor the release of the personal consumption expenditures (PCE) price index for May on Thursday, the central bank's preferred measure of inflation.
Markets expect core PCE, which excludes the more volatile food and energy categories, to rise 0.3% in May after increasing 0.2% in April.
The report takes on added significance following last week's Federal Reserve meeting, which reinforced expectations that policymakers remain concerned about persistent inflation pressures.
The central bank's hawkish tone prompted traders to bring forward expectations for a possible interest rate increase, with some market participants now anticipating action as early as October.
