U.S. Stock Futures Increase Slightly After Dow's Third Consecutive Weekly Loss

U.S. stock futures saw a modest uptick on Sunday night, following the Dow Jones Industrial Average's third consecutive week of losses. Dow futures rose by 0.25%, while S&P 500 futures increased by 0.23%, and Nasdaq-100 futures climbed 0.27%. This slight rise comes amidst escalating tensions in the Middle East, particularly after Iranian-backed Houthi forces claimed responsibility for missile and drone attacks on Saudi Arabia on Saturday. In response to these developments, the U.S. State Department has advised Americans to reconsider travel to the region as threats between the U.S. and Iran have intensified.

Last week, the Dow fell 1.7%, marking its worst performance since March. While the S&P 500 experienced a minor decline of about 0.1%, the tech-heavy Nasdaq recorded a gain of 0.7%. In Asia, the Kospi index increased by 0.85% at the opening, with the small-cap Kosdaq rising by 0.43%. Conversely, Australia's S&P/ASX 200 dropped by 0.49%, while Japan's markets were closed for a holiday. The Hang Seng index in Hong Kong rose by 0.35%, and mainland China's CSI 300 gained 0.64%.

Last week, the Federal Reserve raised interest rates for the first time in three years, amidst ongoing challenges with inflation and high bond yields. Oil prices remain near $100 per barrel, and the 10-year Treasury yield is around the 5% mark. This week’s key summit between U.S. President Donald Trump and Chinese President Xi Jinping is expected to address tariffs, critical minerals, and artificial intelligence among other economic topics. Treasury Secretary Scott Bessent recently met with Chinese Vice Premier He Lifeng prior to this summit.

Jeffrey Roach, chief economist at LPL Financial, noted that the geopolitical tensions contributing to rising energy prices are also maintaining a hawkish stance from the Federal Reserve, affecting Chinese refiners as well. Fed Chairman Kevin Warsh's committee is relying on stabilization in oil markets to shape its inflation outlook, which is also a critical factor for Beijing's economic planning.