Stock futures dipped early Monday as oil prices surged following President Trump’s rejection of Iran’s latest peace proposal. Despite geopolitical concerns, some analysts remain optimistic about the broader economy’s structural strengths.
Asian markets showed mixed reactions, with South Korea’s Kospi reaching a new record high, while other indices experienced fluctuations amidst rising oil prices and inflation data from China.
Stock futures showed a slight decline early Monday, following a positive week for Wall Street, as oil prices experienced a significant jump after President Donald Trump rejected Iran's latest proposal to de-escalate the ongoing conflict. This geopolitical development has injected a dose of caution into the market sentiment.
Futures contracts tied to the Dow Jones Industrial Average fell by 81 points, representing a 0.16% dip. Similarly, S&P 500 futures and Nasdaq 100 futures saw marginal decreases. These movements on Sunday come after a strong performance last week, where the S&P 500 and Nasdaq Composite rallied over 2% and 4% respectively, marking their sixth consecutive week of gains – a rare feat not seen since 2024. The Dow also ended the week on a high, securing its fifth winning week out of the last six.
The positive market momentum late last week was partly fueled by the U.S. nonfarm payrolls report for April, which revealed an increase of 115,000 jobs, surpassing the anticipated 55,000. Both the S&P 500 and Nasdaq closed at all-time highs on Friday.
Traders work at the New York Stock Exchange on May 7, 2026.
NYSE
The geopolitical backdrop saw Iran present a new proposal to U.S. negotiators, aiming to end the protracted conflict. Iran's counteroffer emphasized the necessity of ending the war on all fronts and lifting sanctions against Tehran, as reported by Iran's semi-official Tasnim news agency, citing an informed source. However, President Trump responded on his Truth Social platform, stating his strong disapproval of Iran's response, deeming it "TOTALLY UNACCEPTABLE!" This rejection led to a climb in oil futures during overnight trading.
Despite the heightened tensions, some market analysts anticipate continued market resilience. Rick Rieder, chief investment officer of global fixed income at BlackRock, commented, "The economy may slow somewhat from its prior path, due to the Iran war and subsequent oil price shock." However, he added, "there are many much larger structural components that should keep the aggregate economy in much better shape than many people expect."
Key economic indicators to watch this week include the April consumer and producer price indexes, which will provide insights into the war's impact on inflation. Additionally, investors will be closely monitoring earnings reports from companies such as Under Armour and Cisco.
Asian Markets React to Tensions
In Asia-Pacific markets, South Korea's Kospi index opened at a record high, leading regional gains amid the prevailing Iran-U.S. tensions and rising oil prices. The Kospi surged by 4.70% at the open, while the Kosdaq saw a slight decrease. Index heavyweight SK Hynix experienced a significant rise, mirroring the upward trend in U.S. chip-related equities.
Japan's Nikkei 225 traded with volatility, remaining marginally lower, while the Topix index edged up by 0.19%. Nintendo shares fell notably as the company announced price hikes for the Switch 2 and anticipated a decline in console sales.
Australia's S&P/ASX 200 declined by 0.83%. China's CSI 300 saw a modest gain of 0.58%, while Hong Kong's Hang Seng index dropped by 0.48%. Investors in China were also digesting data showing higher-than-expected inflation in April, driven by increased commodity costs linked to the ongoing Middle East conflict.
Oil prices continued their upward trajectory, with West Texas Intermediate futures for June climbing 3.94% to $99.18 per barrel, and Brent crude futures for July rising 3.49% to $104.83 per barrel as of late Sunday evening ET.
