June 17, 2021

Futures knocked lower by escalating Middle East tensions

2 min read

U.S. stock index futures slid on Monday as escalating tensions between the United States and Iran prompted investors to seek refuge in safer assets such as gold and government bonds.

Trader works at the New York Stock Exchange
FILE PHOTO: A trader works at the New York Stock Exchange (NYSE) in New York, U.S., January 2, 2020. REUTERS/Bryan R Smith

REUTERS: U.S. stock index futures slid on Monday as escalating tensions between the United States and Iran prompted investors to seek refuge in safer assets such as gold and government bonds.

After ending 2019 on a strong note, Wall Street’s main indexes have been knocked off record levels after the killing of a top Iranian general by the United States last week raised the threat of a new Middle East conflagration.

Tehran has threatened to avenge the killing of the military commander, Qassem Soleimani, while President Donald Trump has warned that the United States would strike back, “perhaps in a disproportionate manner”, if Iran attacked any American person or target.

Oil majors Chevron and Exxon Mobil rose about 0.6per cent in premarket trading as Brent crude futures topped US$70 per barrel after Trump also threatened to impose sanctions on Iraq if U.S. troops were forced to withdraw from the country.

Iraq’s parliament earlier called on U.S. and other foreign troops to leave the country.

Shares of Lockheed Martin , the world’s largest defense contractor, rose 1.9per cent, while peers Northrop Grumman and Raytheon gained over 1.5per cent.

At 07:29 a.m. ET, Dow e-minis were down 148 points, or 0.52per cent. S&P 500 e-minis were down 15.5 points, or 0.48per cent and Nasdaq 100 e-minis were down 52 points, or 0.59per cent.

The latest geopolitical concerns have added to fears of anemic earnings growth and less support from the Federal Reserve derailing the longest bull run in U.S. equities.

Apple Inc shares fell about 1per cent after brokerage Needham cut its rating to “buy” from “strong buy”, saying the stock outperformed significantly in 2019.

Shares of Boeing Co dropped 1.1per cent. A Wall Street Journal report said the planemaker was considering plans to raise more debt to bolster its finances after the grounding of its 737 MAX jet.

New York-listed shares of Chinese electric carmaker Nio Inc jumped 11.2per cent after reporting higher deliveries in December, compared with the previous month.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)