The Dow futures are trading with gains of over 200 points on Sunday evening local time as trading resumed. The Nasdaq futures are up over 350 points, while the S&P 500 futures are trading with gains of close to 50 points.
Crude oil prices, both Brent and WTI, are down nearly 5% each after last week’s rally when tensions in West Asia had escalated, pushing Brent past $102 a barrel for the first time in two months. However, the US 10-year bond yield continues to trade near the 4.7% mark, ahead of the US Federal Reserve’s interest rate decision on Wednesday.
Why Are US Futures Rallying?
The US has paused strikes on Iran over the last two days after 13 days of continued attacks. In response, Iran has also paused its retaliatory strikes on US assets in the gulf region.
The market is also, for now, ignoring the involvement of Ukraine in the conflict, after it attacked an Iranian cargo vessel in the Caspian Sea, which has drawn strong protest from the Islamic nation. Ukraine also attacked a privately owned oil refinery in Russia’s Ural region.
According to a New York Times report, US President Donald Trump was advised by his allies against further escalation as it could impact the already dwindling Patriot anti-missile interceptors and other air defence weapons.
The report was denied by the US Ambassador to the United Nations Mike Waltz, who told NBC in an interview that the US military has everything it needs to for continuing its campaign but its the President, who is giving talks some space, as he has always preferred a diplomatic solution to the conflict.
A separate report from Axios also stated that Admiral Brad Cooper, the US commander overseeing operations in West Asia recommended that the strikes be stopped as it has exhausted its limits of effectiveness as well as targets to attack.
Why Is This Week Important For Wall Street?
A slew of macro data and important results get reported through the course of the week on Wall Street starting Tuesday.
Big tech companies Apple, Amazon, Microsoft and Meta will report results across Wednesday and Thursday, following Alphabet’s and Tesla’s post-results sell-off last week.
ARM Holdings, Qualcomm, Starbucks, Visa, Mastercard, Coca-Cola, are also some of the other important results that will be reported this week.
Besides results, the most important trigger on Wall Street this week is the US Federal Reserve’s interest rate decision. The FOMC is facing increasing pressure to raise rates, thereby keeping bond yields higher. New Fed Chair Kevin Warsh has refrained giving any directional guidance on where rates are headed in the future.
GDP data for the second quarter, US consumer sentiment, PCE Inflation data are some of the other important data points that will also be reported this week. Beyond the US, the Bank of England will announce its interest rate decision on Thursday, while the Bank of Japan will announce its decision on Friday.
