Dow Jones futures rise despite risk-off sentiment

• Dow Jones futures may struggle as risk aversion rises on fading hopes for an Iran conflict resolution.
• Trump said the US could seize Iran’s oil, including its key export hub on Kharg Island.
• Iran-backed Houthis struck Israel for the first time, widening the regional conflict.

Dow Jones futures gain 0.20% to above 45,500 during European hours, ahead of the United States (US) regular market open on Monday. Meanwhile, S&P 500 and Nasdaq 100 futures rise 0.30% and 0.25% to near 6,430 and 23,390, respectively, at the time of writing.

US equity futures, however, may come under pressure on increased risk aversion, which could be attributed to the rising doubts over a resolution to the Iran conflict. US President Donald Trump told the Financial Times that the US could “take the oil in Iran,” including seizing the export hub of Kharg Island, which he claimed is undefended. However, Trump added that discussions with Tehran are “doing extremely well,” with indirect talks via emissaries progressing and a deal potentially achievable “fairly quickly.”

A Wall Street Journal (WSJ) report suggested last week that the US Pentagon could deploy 10,000 additional troops to Iran. In response, Ebrahim Zolfaqari issued a stark warning on Iranian state TV, stating that “US troops will be good food for sharks of the Persian Gulf.”

Iran-backed Houthi forces in Yemen launched their first strikes on Israel over the weekend, widening the regional conflict and warning that attacks will continue until operations against Iran and its allies cease. The group also threatens Red Sea shipping routes and key Saudi energy infrastructure, heightening risks to global supply.

Traders will likely track a speech from Fed chair Jerome Powell late Monday evening. On the earnings front, Terns Pharmaceuticals, Inc., Allied Gold Corporation, and USA Rare Earth, Inc. will be eyed later in the day. On the data front, traders now turn to key US economic releases this week, including labor market indicators, particularly Nonfarm Payrolls (NFP), and the ISM Purchasing Managers’ Index (PMI).