Nasdaq futures climb 0.4% as oil rises on US-Iran tensions

Nasdaq 100 futures rose 0.4% in early Monday trading, signaling a potential end to the index's four-week losing streak, as traders weighed a weekend flare-up in US-Iran hostilities against the prospect of a tech-sector rebound.

"The market is caught between two forces — a Nasdaq that looks oversold after four weeks of declines and a geopolitical risk premium that's creeping back into oil," said Sarah Lin, equity strategist at Edgen. "The question is whether the tech bounce has legs or gets sold into."

Brent crude advanced 0.99% to $73.32 a barrel, while West Texas Intermediate climbed 1.21% to $70.07, after Iran and the US traded strikes over the weekend that hit a tanker carrying Qatari crude near the Strait of Hormuz. Both sides later agreed to halt hostilities, but the episode underscored the fragility of the interim peace deal reached earlier this month. Spot gold slipped 0.5% to $4,067.99 an ounce, while the dollar held near a one-year high against major peers.

The Nasdaq Composite has fallen for four consecutive weeks, its longest losing streak since August 2023, pressured by hawkish repricing of Federal Reserve rate expectations and a rotation out of growth stocks. May's core PCE inflation reading of 4.1% — the highest in three years — has markets pricing in as many as three rate hikes by year-end, with a September hike probability of about 62%, according to the CME FedWatch Tool. For the tech-heavy Nasdaq, lower duration sensitivity to rising rates has been a headwind, though some traders see the selloff as overdone. S&P 500 futures also gained 0.4%, while the Dow Jones Industrial Average futures were little changed.

Oil's inflation feedback loop

The rise in crude prices complicates the inflation outlook that has been driving equity market moves. Every $5 increase in oil adds roughly 0.2 percentage points to headline CPI, according to historical estimates — a dynamic that could reinforce the Fed's hawkish stance and keep pressure on growth stocks. Asian markets reflected the crosscurrents: South Korea's KOSPI fell 1.75% on semiconductor weakness, Japan's Nikkei 225 slipped 1%, while MSCI's broadest index of Asia-Pacific shares declined 0.4%.

Traders are now watching for a catalyst that could sustain a Nasdaq recovery. Key levels include the 50-day moving average near 17,800 for the Nasdaq 100, with resistance at 18,200. On the downside, support sits at 17,200. This week's US non-farm payrolls report and ISM Manufacturing PMI will be the next major tests for both rate expectations and equity direction.

This article is for informational purposes only and does not constitute investment advice.