US stock futures are trading higher on Monday morning, with the Dow Jones Industrial Average Futures rising by 244 points (0.5%), S&P 500 Futures gaining 0.6%, and Nasdaq 100 Futures advancing 1.2%. This positive sentiment follows a significant decline in crude oil prices after a pause in the conflict between the United States and Iran.
Crude oil prices tumbled over 5% at the start of the week. West Texas Intermediate (WTI) crude futures were down 5.36% at $84.52 per barrel, while Brent crude futures with August delivery were 5% lower at $91.97, falling below the psychologically important $100 level. On COMEX, crude prices slipped 5.4% to trade at $84.50 a barrel. The September Brent crude oil contract dropped 4.9% to $92.02, while the September U.S. oil benchmark fell 5.6% to $84.34. The October Brent crude contract, now the most actively traded, dropped 4.6% to $87.48. This drop in oil prices is seen as a relief to markets, as lower energy costs could ease inflationary pressures and improve economic outlooks.
The pause in hostilities between the US and Iran, which saw the US halt its bombing campaign and Tehran suspend retaliatory attacks, has revived hopes for diplomacy to end the conflict. This development has also cooled US Federal Reserve rate-hike bets, dragging the safe-haven US Dollar away from its monthly high. Last week, traders were betting on a 36% chance the Federal Reserve would hike its main interest rate at an upcoming meeting due to rising inflation concerns, which were exacerbated by oil prices briefly hitting $102 a barrel.
On Friday, US markets saw mixed performance ahead of the weekend's geopolitical developments. The S&P 500 index added a marginal 0.05% to close at 7,411.98, while the Nasdaq Composite dropped 0.64% to end at 24,975.82. In contrast, the Dow Jones Industrial Average gained 235.60 points, or 0.46%, to settle at 51,947.25.
