Dow Futures experience a modest increase as the market anticipates a week laden with significant economic indicators. A measure of U.S. services sector activity will be in the spotlight on Monday, while oil prices inch down after OPEC+ unveils plans for further crude production increases and spot gold declines as the U.S. dollar strengthens.
Dow futures remained predominantly above the flatline after a lengthy weekend on Wall Street. By 03:01, the futures contract for the Dow was broadly unchanged, while the S&P 500 futures had increased by 25 points, or 0.3%, and the Nasdaq 100 futures had risen by 276 points, or 0.9%. The averages were closed on Friday in observance of the U.S. Independence Day holiday. Markets are poised to focus on the economic calendar in the upcoming week. Last week, weaker-than-expected June payrolls diminished expectations that the Federal Reserve might implement interest rate hikes in the near term. Speeches from Fed policymakers in the upcoming days may provide additional clarity regarding the central bank’s perspective on the trajectory of interest rates for the remainder of the year.
On Monday, attention will be directed towards a tracker of activity within the crucial U.S. services sector. The Institute for Supply Management’s non-manufacturing purchasing managers’ index for June is projected to register at 54.2, reflecting a modest decline from the previous month’s figure of 54.5. A reading above 50 indicates expansion. The services sector constitutes over two-thirds of total U.S. growth, positioning it as a vital driver of the largest economy globally. Last week, a distinct ISM measure of manufacturing activity decelerated more than anticipated, following a spike in May, as enterprises assessed the implications of the Iran conflict and the persistent expansion of artificial intelligence.
Oil prices experienced a decline on Monday, subsequent to a resolution by a significant coalition of crude-producing nations to elevate its output targets starting in August. By 03:26, Brent crude futures, the global oil benchmark, had decreased by 0.4% to $71.86 a barrel, whereas U.S. West Texas Intermediate crude futures had declined by 0.2% to $68.63 a barrel. WTI did not settle on Friday due to the closure of U.S. markets. The two contracts exhibited subdued activity last week, as traders monitored the ongoing peace negotiations between the U.S. and Iran, which may influence the shipping outlook through the strategically significant Strait of Hormuz. On Sunday, the Organization of the Petroleum Exporting Countries and its allies, including Russia, declared an increase in their production targets by 188,000 barrels per day starting in August. The move, which would be in addition to similar increases in June and July, combined with reports of recovering flows in the Strait of Hormuz, suggests an expanding global oil supply landscape.
In other markets, spot gold prices experienced a decline, as the dollar regained some of its recent losses in the context of ongoing uncertainty regarding U.S. interest rates. The yellow metal experienced a decline in momentum following its recovery from eight-month lows last week, while the greenback strengthened after approaching near two-week lows. A stronger dollar can exert pressure on bullion by increasing its cost for international purchasers. Gold’s rally was prompted by the disappointing U.S. nonfarm payrolls report, which led to a reduction in expectations that the Federal Reserve will have sufficient capacity to increase interest rates in 2026. Inflation and the labour market represent the primary factors influencing the central bank’s decisions regarding interest rate adjustments. Persistent price increases and robustness in the labour market may provide the central bank with additional motivation to raise interest rates. Higher rates negatively impact gold, as they elevate the opportunity cost of investing in non-yielding assets compared to government debt.
Foxconn, known formally as Hon Hai Precision Industry, clocked a sharp jump in its second-quarter revenue thanks to outsized demand for artificial intelligence products, although the company warned of geopolitical volatility. Foxconn’s revenue in the April-June quarter surged 39.8% year-on-year to T$2.513 trillion, as reported by the world’s largest contract electronics maker in a statement on Sunday. The company highlighted robust demand for cloud and networking products driven by the rapid advancement of AI technology, while its consumer electronics division also reported significant growth.