U.S. stock futures rose early Monday despite escalating global geopolitical tensions over the weekend.
Dow Jones Industrial Average futures jumped 0.3%, S&P 500 futures rose 0.4% and futures on the Nasdaq 100 were 0.5% higher ahead of the open. All three indexes tumbled Friday amid disappointing earnings from a number of big banks and fears of a deepening conflict in the Middle East.
Those fears appeared to be realized Saturday as Iran launched a wave of drones and missiles toward Israel. The majority of missiles were shot down by Israeli, American and other forces, The Wall Street Journal reported.
Yet futures pointed higher, and the price of Brent crude oil retreated below $90 a barrel early Monday, after reaching $92 Friday. “Since markets have reopened after the weekend, the reaction among key assets has been subdued, with investors hopeful that any escalation will prove contained,” Deutsche Bank strategist Henry Allen said in a note early Monday.
Investors may be comforted by diplomatic efforts to de-escalate tensions. President Biden urged Israel to use caution in its response to what he described as an “unprecedented air attack” by Iran.
But uncertainty is likely to dominate market action this week as the eyes of the world fall on Israel and whether it retaliates. “Whoever harms us, we will harm them. We will defend ourselves against any threat and will do so level-headedly and with determination,” Israeli Prime Minister Benjamin Netanyahu said in response to the attacks.
Investors will therefore be watching very closely for any further escalation, and the scale of the broadening conflict–but it may not be time to panic.
“The shock of conflict is devastating, but history does point to relatively short-lived volatility on financial markets,” Hargreaves Lansdown analyst Susannah Streeter said. “Investors should take the time to ensure that they have a diversified portfolio with a basket of assets spread across different sectors and geographies,” she added.
Source: Stock Market Today: Dow, S&P 500 Set to Open Up; Tesla, Apple, Goldman Sachs, and More
