Overview
U.S. equity futures opened the trading week under pressure after President Donald Trump called off plans to dispatch negotiators to Pakistan for fresh talks with Iran, prolonging the standoff between Washington and Tehran. The continued effective closure of the Strait of Hormuz has kept upward pressure on crude prices. Against that geopolitical backdrop, corporate America will deliver a torrent of quarterly results this week, led off by Verizon, with mega-cap technology names including Alphabet and Microsoft scheduled to report later in the week.
1. Futures slip as a busy week looms
By 03:30 ET (07:30 GMT), futures tied to the main U.S. indexes were lower: the Dow futures contract was down about 86 points, or 0.2%, S&P 500 futures had eased roughly 8 points, or 0.1%, and Nasdaq 100 futures had fallen about 19 points, or 0.1%.
Those pulls back came after the benchmark S&P 500 and the tech-heavy Nasdaq Composite finished the previous trading week higher, supported in part by hopes that talks between the U.S. and Iran might resume and bring an end to weeks of hostilities that have disrupted commercial traffic through the Strait of Hormuz.
Over the weekend, however, Mr. Trump withdrew plans to send negotiators to Pakistan for renewed discussions with Iran. He said Tehran could "call me" and added that Washington holds "all the cards," signaling that the protracted disruption to the strait - a route for roughly a fifth of the world's oil - is likely to continue for the near term.
2. Oil rises as U.S.-Iran impasse persists
Analysts and traders are braced for a proliferation of headlines tied to the Iran situation. Strategists at Vital Knowledge warned that "there will probably be a million more Iran headlines" for markets to process this week.
Axios reported that Iran has put forward a new proposal to the U.S. to reopen the Strait of Hormuz and bring an end to hostilities, with negotiations over Iran's nuclear program to be postponed to a later stage. Despite that report, actual flows through the strait remain constrained, contributing to a renewed jump in oil benchmarks on Monday.
By 03:40 ET, Brent crude futures had gained 2.4% to $107.87 a barrel, while West Texas Intermediate futures rose 2.3% to $96.58 a barrel.
3. Verizon to kick off a heavy week of earnings
Verizon is set to publish results before the opening bell on Monday, starting a busy stretch for corporate earnings. Consensus figures compiled by Bloomberg point to a decline in retail postpaid phone subscribers of 89,169. Adjusted earnings before interest, taxes, depreciation and amortization are estimated at $13.14 billion, against operating revenue seen at $34.8 billion.
Investors will monitor Verizon's efforts to integrate wireless and broadband offerings to support subscriber growth. The company's fiber footprint was expanded through its acquisition of Frontier Communications' fiber-optic internet assets. In January, Verizon issued a positive outlook for full-year profit and free cash flow and announced its first share buyback program in almost six years.
Those Verizon results will arrive before a broader slate of corporate reports that includes major technology names such as Alphabet and Microsoft. Market participants will be particularly attentive to commentary on massive artificial intelligence spending plans among hyperscalers, as those expenditures are central to supporting the developing AI industry.
4. Budget carriers seek government help amid jet fuel spike
According to a Wall Street Journal report, a group of U.S. budget airlines - including Frontier and Avelo - is seeking $2.5 billion in government assistance in return for warrants that could convert into equity stakes. The airlines arrived at the $2.5 billion figure by estimating how much more they expect to spend on jet fuel this year relative to previous forecasts.
The estimate assumes jet fuel prices will average above $4 a gallon for the remainder of the year. Discussions over a possible aid package were expected to continue over the coming days, the WSJ said. Global airlines have been hit by a surge in jet fuel costs as the U.S.-Israeli war on Iran disrupted oil supplies and pushed upstream prices higher.
5. Bank of Japan decision in focus
The Bank of Japan is widely expected to keep its policy interest rate unchanged at the conclusion of its meeting on April 28, though officials could adopt a more hawkish tone given rising inflationary pressures and higher energy costs. Investing.com data showed the BOJ is projected to hold its benchmark short-term rate at 0.75%.
If unchanged, the April decision would likely mark the third consecutive hold after the central bank raised rates by 25 basis points in December. Market expectations for another hike in April were moderated by a series of less hawkish messages from the BOJ, and the central bank has flagged heightened uncertainty over the economic consequences of the Iran conflict, prompting some market participants to anticipate a wait-and-see approach.
Nevertheless, the BOJ is also expected to maintain a broadly hawkish outlook and could lift inflation expectations in response to energy and shipping shocks stemming from the Iran situation.
What to watch this week
- Corporate earnings flow, beginning with Verizon and including Alphabet and Microsoft, with particular attention on AI-related capital spending.
- Geopolitical developments involving U.S.-Iran negotiations and any changes to traffic through the Strait of Hormuz that could affect oil markets.
- Central bank policy decisions, notably the Bank of Japan meeting on April 28 and other major rate announcements due this week.
Note: The sequence of events and data above reflect reports and consensus estimates available ahead of market openings and central bank announcements. Market participants will be parsing company disclosures and policy statements throughout the week for fresh signals.