Dow Futures exhibit volatility, while oil retracts from some initial gains following the unexpected U.S. strikes on Iranian nuclear facilities over the weekend. Uncertainty continues to envelop Iran’s reaction to the attacks and the potential ramifications for global oil and gas supplies, as U.S. President Donald Trump discusses the prospect of “regime change” in the nation. In other developments, the U.S. Senate is working towards the passage of its version of a fiscal bill supported by Trump, while traders are monitoring business activity data scheduled for release later on Monday.
U.S. stock futures remained steady, as investors carefully evaluated the implications of the recent U.S. strikes on Iranian nuclear facilities executed over the weekend. The Dow futures contract exhibited minimal variation, while S&P 500 futures experienced an uptick of 10 points, representing a 0.2% increase, and Nasdaq 100 futures saw an addition of 46 points, also reflecting a 0.2% rise. The primary indices on Wall Street concluded the trading session in negative territory on Friday, as investors closely monitored the ongoing air conflict between Israel and Iran, alongside the possible engagement of U.S. military forces in the situation.
President Trump alleviated a significant portion of this uncertainty with his announcement regarding the execution of strikes on three nuclear facilities in Iran that took place on Saturday. Markets are now eager to assess the implications of the decision, which followed Trump’s earlier indication that he might spend up to two weeks contemplating a potential strike on Iran, on sentiment, inflation, and interest rates. Concerns regarding price inflation are largely attributed to oil, as traders have recently cautioned that an intensification of hostilities between Israel and Iran may result in interruptions to vital crude supplies, especially in the Strait of Hormuz, located along Iran’s southern coastline. Concerns have been raised by certain analysts regarding the possibility that an increase in oil prices may reignite inflationary pressures, which could result in the Federal Reserve postponing any potential interest rate reductions.
Brent crude futures for August increased by 0.2% to $77.17 per barrel by 05:21 ET on Monday, while West Texas Intermediate crude futures also rose by 0.2% to $72.15 a barrel. Both contracts have reduced some of their previous gains. “Since the U.S. targeted Iranian nuclear facilities over the weekend, supply risks for energy markets have increased significantly amid uncertainty about how Iran will retaliate,” stated Warren Patterson, Head of Commodities Strategy at ING, in a note.
Tehran has not provided a definitive response regarding its strategy in light of the U.S. attack, stating that it retains all options for self-defense. The Islamic republic has issued a warning of “everlasting consequences” and has intensified its aerial bombardments of Israel, which initiated the violence 11 days ago with its own unexpected attacks on Iranian nuclear infrastructure. Iran has characterized Trump as a “gambler” and suggested that the recent weekend strikes have broadened the scope of acceptable military targets. Trump, in a social media post on Sunday, posed the question of regime change in Iran. Media reports in Iran indicate that the country is considering the possibility of blocking the Strait of Hormuz, a crucial conduit for global oil and gas supplies originating from the Middle East. Additional reports indicate that Iran could potentially focus on one of various U.S. military installations situated across the region.
Some analysts contend that, in the context of financial markets, the recent escalation of tensions in the Middle East has, at the very least, alleviated one layer of uncertainty regarding the likelihood of Trump initiating military action against Iran. “With the overhang of uncertainty lifted somewhat, the weekend events could ultimately result in a net positive,” analysts at Vital Knowledge stated in a note to clients. They noted that, “once geopolitics fade from the headlines,” investors will continue to encounter “headwinds” stemming from persistent challenges such as tariffs and fiscal policy.
The U.S. Senate is said to be preparing to conduct a vote on their iteration of a substantial tax-and-spending package this week. Republican lawmakers are advocating for the approval of their revised version of the “One Big Beautiful Bill Act,” with plans to return it to the House and subsequently present it for Trump’s signature, all aimed at meeting a self-imposed deadline of July 4. Supported by Trump, the proposal encompasses the prolongation of the 2017 tax reductions established during his earlier administration, alongside augmented spending on defense and border security. Some of these costs would subsequently be mitigated by reductions in spending on entitlements such as Medicaid, a federal health insurance program catering to over 71 million low-income Americans.
However, the Senate parliamentarian, serving as the rules arbiter for the upper chamber, has recently provided guidelines indicating that certain items within the package do not comply with budgetary regulations. The nonpartisan referee indicated that Republican provisions, including a reduction in funding for the Consumer Financial Protection Bureau and other financial watchdogs, may face challenges in being approved by a simple majority in the Republican-controlled Senate. The Republican Party has been strategizing to utilize the budget reconciliation process as a means to navigate Democratic resistance and advance the comprehensive fiscal legislation. In this process, certain budget-related provisions may receive approval through a simple majority, diverging from the Senate’s usual requirement of a 60-vote threshold.
On the economic calendar, investors will monitor the business activity figures for June. S&P Global’s manufacturing purchasing managers’ index is projected to decline to 51.1 from 52.0, while the services gauge is anticipated to decrease to 52.9 from 53.7. The forthcoming figures will act as a precursor to a variety of economic indicators scheduled for release this week, notably a consumer confidence reading on Tuesday and an inflation measure that garners significant attention from the Federal Reserve on Friday. Consumer confidence in the U.S. has declined in recent months, as Americans voice concerns regarding the implications of Trump’s extensive tariff policy on inflation and economic growth. Price gains have remained relatively subdued, and optimism for a resolution in global disputes regarding the levies has been strengthened by discussions between the U.S. and China.