U.S. equity futures were slightly higher before the start of a fresh trading week as investors prepared for a busy slate of corporate results and a set of deferred economic data points. Technology-sector companies and commodity markets were among the areas closely watched for directional cues.
By 03:43 ET (08:43 GMT) on Monday, futures tied to the main U.S. indexes showed modest gains: the Dow futures contract was up about 87 points, or 0.2%, S&P 500 futures had climbed roughly 6 points, or 0.1%, and Nasdaq 100 futures were higher by about 13 points, or 0.1%.
Those early moves followed a rally on Wall Street in the prior session that trimmed losses incurred earlier in the week. The earlier weakness had been driven in part by investor concern that artificial intelligence tools could pose a negative pressure on a range of software companies. At the close on Friday, the Dow Jones Industrial Average had surged past the 50,000 level for the first time ever, the S&P 500 had advanced nearly 2%, and the Nasdaq Composite had risen by about 2.2%.
Despite the broader gains, some of the largest technology names stalled. Amazon shares retreated 5.6% after investors reacted to indications that the e-commerce company plans to substantially increase spending on artificial intelligence initiatives. Other major technology players, including Google-parent Alphabet, have also outlined plans for sizable AI-related investments this year, though questions remain about the timing for those expenditures to produce sustainable returns.
Earnings spotlight - Onsemi
On the corporate calendar, semiconductor manufacturer Onsemi is among the more prominent companies set to report results on Monday. The firm had previously issued guidance for fourth-quarter revenue and profit that was broadly consistent with market expectations.
Company commentary highlighted resilience in a business line that supplies technology to manage power consumption at AI data centers, which has helped offset weaker demand from the automotive sector in North America and Europe. Softer electric vehicle demand has weighed on spending by automakers for silicon carbide chips, which are part of Onsemi’s product mix.
When Onsemi reports earnings after the market close, consensus estimates compiled by Bloomberg expect adjusted earnings per share of $0.63 on revenue of $1.53 billion. Investors will also be watching a stream of other quarterly updates this week from technology-related companies such as Datadog, Spotify, Cisco, and Applied Materials.
Japanese election result lifts Asian markets
Beyond the United States, Asian equity markets rallied on Monday following what was described as a major victory for Japan’s Prime Minister Sanae Takaichi in a snap election over the weekend. Ms. Takaichi, who became Japan’s first female prime minister 110 days earlier, had staked a significant political bet on the vote.
Reports indicated that Ms. Takaichi’s Liberal Democratic Party secured such broad backing that it achieved a rare supermajority in the lower house of Japan’s parliament. The outcome appears to clear a path for her government to pursue proposed increases in spending and reductions in taxes.
Thomas Mathews, Head of Asia Pacific Markets at Capital Economics, wrote in a note that the market could be entering a calmer period now that the election uncertainty has been resolved. Mathews added that a recent sell-off in Japanese government bonds, which had weighed on global financial markets, is not expected to continue and that the yen is likely to strengthen.
Precious metals
Gold prices rose in European trading hours, and silver also recorded gains after last week’s volatile swings, which included erratic haven flows, profit-taking and uncertainty tied to U.S. monetary policy. Market participants are looking ahead to several important U.S. economic releases this week - most notably nonfarm payrolls and the consumer price index - which could influence Federal Reserve interest rate decisions.
Some of the safe-haven demand for precious metals eased after reports that the United States and Iran had made some progress in weekend discussions. Both sides said they would continue talks about Tehran’s nuclear activities, which reduced immediate fears around heightened geopolitical risk.
Oil retreats
Oil prices fell as markets reacted to reports that the United States and Iran intended to sustain diplomatic engagement over Iran’s nuclear program, a dynamic that dampened concerns of an imminent spike in regional conflict. The dollar’s relative strength ahead of the key U.S. economic prints also pressured crude, following a roughly 2% decline in oil the previous week.
On the day, Brent futures were last down 1.1% at $67.32 a barrel, while West Texas Intermediate futures slipped 1.0% to $62.92 a barrel. Washington and Tehran said on the weekend that indirect nuclear talks held in Oman on Friday were positive and would continue, a message that helped reduce market anxiety after U.S. deployments of naval assets to the Middle East earlier in the year.
What to watch this week
Investors will monitor a mix of corporate earnings and macroeconomic data for signals on profit trends, demand areas, and potential policy responses. Key U.S. data releases, including payrolls and the CPI, remain central to how markets assess the Federal Reserve’s path on interest rates. Corporate reports - starting with Onsemi and followed by other tech-related names - will provide additional insight into demand dynamics across data-center infrastructure and other end markets.
Given the confluence of political developments in Japan, earnings season in the U.S., and progress in diplomatic talks between Washington and Tehran, market participants will be parsing both economic and geopolitical developments for their implications on risk and safe-haven assets.