GLOBAL MARKETS-US futures rally as halt to Middle East attacks keeps oil muted

U.S. stock futures advanced Monday after Washington and Tehran agreed to pause recent hostilities and resume dialogue, easing a key geopolitical risk and keeping oil prices in check following an initial spike.

European stocks were broadly steady, while technology shares outperformed on both sides of the Atlantic as investors looked for a rebound after last week’s AI-driven selloff.

Market snapshot

• U.S. S&P 500 futures up about 0.8%.
• Nasdaq futures higher by roughly 1.1%, pointing to a tech-led recovery after a drop of more than 4% last week.
• Europe’s STOXX 600 little changed; regional tech names up around 1.2%.
• Asia mixed: South Korea’s KOSPI down about 0.2%; Japan’s Nikkei up around 0.2%.

Energy and geopolitical backdrop

After weekend strikes were traded between the U.S. and Iran, crude initially jumped but then cooled as both sides moved to halt attacks and reopen talks. Brent crude last traded up around 0.7% near $72.50 a barrel, yet remains down roughly 22% for the month.

Softer oil is providing a tailwind for sentiment. According to Jefferies chief European economist Mohit Kumar, lower energy prices can support a rotation toward more growth-sensitive sectors that lagged in recent months.

Tech steadies after AI jitters

Investors are cautiously re-entering technology after concerns about the pace and payoff of AI spending sparked profit-taking last week. The Bank for International Settlements flagged risks to the durability of the current AI investment wave, citing supply constraints and fierce competition that could lead to overinvestment reminiscent of past boom-bust cycles. Even so, Monday’s tone suggests markets are ready to claw back some losses.

Rates, inflation, and currencies

Despite the pullback in oil, inflation metrics have accelerated in the U.S. and elsewhere, keeping pressure on the Federal Reserve to consider additional tightening. Market pricing now implies at least one rate increase this year—a notable shift from expectations of two cuts before the recent flare-up in the Middle East. Some strategists at major banks even anticipate the possibility of up to three hikes, pointing to resilient U.S. labor market data.

The dollar is holding firm. The dollar index was slightly softer near 101.25, just under last week’s one-year high. The Japanese yen hovered around 161.80 per dollar, with traders wary of potential official intervention as the currency approaches multi-decade lows.

Gold under pressure

A sturdier dollar and higher rate expectations weighed on precious metals. Spot gold slipped about 1.3% to roughly $4,034 per ounce and is on track for a quarterly drop of around 13%, which would be its steepest since 2013.

Outlook

With geopolitical tensions tentatively cooling and oil prices easing, risk appetite has improved to start the week, especially for growth and tech names. The key swing factors ahead are whether diplomatic momentum in the Middle East holds, how quickly AI sentiment stabilizes, and whether incoming U.S. data push the Fed further toward renewed tightening. For now, futures point to a constructive open, but rate expectations and currency moves remain in the driver’s seat for cross-asset volatility.