Markets Edge Higher on Regional Peace Hopes Amid Renewed Sector Focus
U.S. stock index futures edged higher on Monday as signs of de-escalating tensions in the Middle East weighed on crude prices, while investors prepared for another week packed with earnings and economic data.
Traders also weighed potential consolidation in the healthcare sector, after a report said Bristol Myers Squibb (BMY.N) and AstraZeneca (AZN.L) held preliminary merger talks, which could form one of the world’s biggest drugmakers worth nearly $400 billion. The U.S. company’s shares rose 8% in premarket trading, while its UK rival slid 6%.
In geopolitics, U.S. President Donald Trump said talks with Iran to reopen the Strait of Hormuz will happen sometime during the day but declined to set a deadline for an agreement.
Brent Crude prices fell 5.7% to $83.77 a barrel, while the yield on the two-year Treasury note , reflecting short-term interest rate expectations, dipped four basis points to 4.291%. Higher energy costs, since the start of the conflict, have fueled uncertainty over repercussions on the global economy.
After Big Tech earnings in the previous week showed that AI investments were paying off, investors will be keen on how other major names in the AI space have been faring.
SpaceX (SPCX.O) will report on Tuesday its first quarterly report since its public debut, with the scrutiny on its AI spending and profits from its Starlink satellite communications network. Shares of the Elon Musk-backed company, which have been trading below their offering price of $135 for nearly three weeks, inched up 0.3%.
Other AI-linked companies reporting this week include Palantir (PLTR.O) Advanced Micro Devices (AMD.O) and memory chipmakers SanDisk (SNDK.O) and Western Digital (WDC.O). Palantir was up 2.5%, while other stocks were little changed.
Micron (MU.O) dipped 1.3% after Reuters reported that Chinese rival CXMT (688825.SS) is considering building a second memory-chip plant in Beijing and is in financing talks with a tech manufacturing hub backed by the local government.
At 5:29 a.m. ET, Dow E-minis were up 329 points, or 0.63% and S&P 500 E-minis were up 36.75 points, or 0.49%. Nasdaq 100 E-minis were up 151 points, or 0.53%.
Wall Street had a rough July, bogged down by global concerns about the trajectory for artificial intelligence, interest rates and a raging conflict in the Middle East.
Adding to the uncertainty, Federal Reserve chair Kevin Warsh raised the idea of reducing the number of regularly scheduled rate-setting meetings, a report said, in line with his plan to reduce Fed guidance on rates.
Traders are pricing in a 64% chance that the central bank would increase interest rates in September, the CME Group’s FedWatch Tool showed.
Healthcare, consumer and energy sectors will also be in focus, with earnings from Eli Lilly (LLY.N) McDonald’s (MCD.N) and Occidental Petroleum (OXY.N) among those due this week.
The week is also packed with several labor market reports, with the official non-farm payrolls figures due on Friday. A business activity survey later in the day would give markets a clearer picture about the health of the manufacturing sector during July.
Traders also kept an eye on U.S-Japan intervention in currency markets to halt the yen’s slide.
Reporting by Johann M Cherian in Bengaluru; Editing by Joyjeet Das
This article was first reported by Reuters
