Dow Jones seen remaining in red, oil eases on reports of Iran sanctions lifted

US stocks have been predicted to start Monday trading in the red, as they ended last week, with investors continuing to worry about rising bond yields, stubborn inflation and the economic fallout from higher oil prices.

Dow Jones futures were down around 262 points or 0.4%, while S&P 500 and Nasdaq futures were down around 0.3% as Walkl Street’s key equity indexes continued to retreat from record highs seen last week.

All three majors closed Friday more than 1% lower, with the Nasdaq leading the retreat by shedding 1.5% as traders cut exposure to technology and AI-linked shares ahead of Nvidia earnings this week.

Bond markets remained under pressure after stronger-than-expected US inflation data last week fuelled concerns that the Federal Reserve may need to keep interest rates higher for longer, or even consider further hikes.

The US 30-year Treasury yield climbed above 5.1%, its highest level since 2023, while oil prices remained elevated amid concerns over disruption in the Strait of Hormuz.

WTI crude rose to a two-week high above $108 a barrel overnight, though it was down to just over $105 in recent trading after Iranian newswires reported some progress in negotiations with Washington, where Pakistan is acting as a go-between.

Washington “has accepted the lifting of Iran’s oil sanctions in its new text,” the semi-official Tasnim agency reported, with the US proposing a temporary waiver by the Office of Foreign Assets Control until a final agreement with Tehran is secured.

European markets have been resilient at the start of the week, with Frankfurt’s DAX up 1% and London’s FTSE 100 gaining 0.5%, though France’s CAC 40 slipped into negative territory.

Macroeconomic data to watch during the week includes pending home sales on Tuesday, mortgage approvals and Fed minutes on Wednesday, then flash PMI data from the US, UK, Germany and the Eurozone on Thursday.

Global PMIs will be “a real-time pulse check on the global economy”, says market analyst Kenny Polcari at Slatestone.

“Is growth slowing? Or are we drifting toward that ugly stagflation setup where growth weakens while inflation stays sticky?”

There will also be inflation data out of the UK and Canada, which Polcari says “will matter more than usual because investors are trying to determine if this inflation problem is global again and not just a US issue”.

He concluded: “But let’s be honest… while all of that matters — next week is really about one thing: NVDA earnings – due out on Wednesday after the bell. Remember – NVDA is not just ‘another stock’. It has become the heartbeat of the entire AI trade, the semis, the Nasdaq and frankly overall market sentiment as well.”