U.S. Stock Futures Slip as Israel-Hamas Conflict Heightens Global Uncertainty

U.S. stock index futures dipped on Monday as the escalating conflict between Israel and Hamas created uncertainty in global markets. The growing tensions pushed investors towards safe-haven assets, while crude oil prices surged by nearly 3%.

Israel’s ongoing battle to recapture towns from Hamas gunmen, who have killed 700 Israelis and taken hostages, has resulted in the country’s heaviest-ever bombardment of the Gaza strip, resulting in the deaths of over 400 people. The conflict has extended longer than expected, with the militants crossing the fence from Gaza on a deadly rampage.

In a show of support, the United States will be sending multiple military ships and aircraft closer to Israel, according to U.S. Defense Secretary Lloyd Austin. As a result, traditional safe-haven assets like gold and the U.S. dollar gained, while crude oil prices rose.

Mohit Kumar, chief economist Europe at Jefferies, stated that the scale of the attack and loss of lives suggests that the response is likely to last for a few months, potentially until year-end.

In premarket trading, U.S. energy companies such as Chevron, Exxon Mobil, Marathon Oil, and Occidental Petroleum saw gains between 2.1% and 3.7% due to the rise in oil prices. Defense companies, including Northrop Grumman, RTX, General Dynamics, and Lockheed Martin, also advanced between 4.1% and 5%.

However, megacap stocks like Apple, Microsoft, Nvidia, Meta Platforms, Alphabet, and Amazon.com experienced a slight dip ranging from 0.3% to 2.1%.

Investors will closely monitor data releases this week, including the September producer price index and consumer price inflation readings. Additionally, speeches by Federal Reserve Vice Chair Philip Jefferson and Vice Chair for Supervision Michael Barr will be of interest.

Over the weekend, Federal Reserve Governor Michelle Bowman reiterated that inflation remains too high, suggesting the need for further tightening of monetary policy.

This week, attention will also turn to the quarterly earnings reports from major banks such as JPMorgan Chase, Wells Fargo, Citigroup, and asset manager BlackRock.

In other news, Tesla’s China-made electric vehicle sales volume for September decreased by 10.9% compared to the previous year, leading to a 1.6% dip in Tesla’s shares. Furthermore, cancer drugmaker Mirati Therapeutics saw a 2% decline in its stock after Bristol-Myers Squibb announced its acquisition of the company in a deal worth up to $5.8 billion.

As the Israel-Hamas conflict continues to unfold, global markets remain on edge, with investors closely monitoring developments and seeking safe-haven assets amidst the uncertainty.