US futures rise on AI optimism as Middle East tensions weigh on oil
Nvidia’s new RTX Spark chip drives pre-market rallies, while renewed US-Iran hostilities push crude oil prices higher and bond yields climb.
US stock index futures advanced on Monday morning, with June S&P 500 E-Mini futures rising 0.31% and June Nasdaq 100 E-Mini futures gaining 0.23%. The upward momentum was primarily fueled by optimism surrounding artificial intelligence, particularly following Nvidia’s unveiling of the RTX Spark chip. Developed in partnership with Microsoft and scheduled for release this autumn, the chip was described by the company as the most efficient PC chip ever built, designed to enable personal devices to run AI agents.
Pre-market trading reflected this sentiment, with Nvidia shares rising more than 2%. The announcement also lifted AI infrastructure stocks, as Micron Technology climbed over 5% and Sandisk gained more than 4%. Conversely, competitors Intel and Advanced Micro Devices saw their shares slip by more than 6% and 4% respectively, as the new hardware threatens to challenge their dominance in the PC chip market. Microsoft also advanced over 3%, with Citizens initiating coverage with an Outperform rating.
However, these equity gains were partially offset by rising geopolitical risks and higher bond yields. Renewed US-Iran hostilities pushed WTI crude oil prices up by over 3%, as uncertainty persisted regarding a potential ceasefire and the resumption of flows through the Strait of Hormuz. Tensions escalated after Israel intensified its offensive against Hezbollah in Lebanon and Iran struck a Kuwaiti air base, while the US carried out strikes on Iranian radar sites.
The rise in oil prices contributed to inflation concerns, causing Treasuries to fall across the curve. The benchmark 10-year yield rose three basis points to 4.47%, up 0.59% from previous levels. Market participants are now closely watching key US labour market data, including the Nonfarm Payrolls report, as well as earnings from major technology firms such as Broadcom, CrowdStrike, and Palo Alto Networks.
In the broader market context, Wall Street’s major indices ended Friday in the green, with the S&P 500, Dow, and Nasdaq 100 posting new record highs. Recent earnings reports have been strong, with Dell Technologies surging over 32% and software stocks like Atlassian and ServiceNow rallying significantly. Meanwhile, Eurozone and Asian markets showed mixed performance, with Japan’s Nikkei 225 topping 67,000 driven by AI trade optimism, while China’s Shanghai Composite dipped on tepid factory data.
