US stock futures edged higher on Monday, pointing to a positive start on Wall Street as investors weighed hopes of progress on the Strait of Hormuz, expectations of softer inflation and reduced prospects of further Federal Reserve tightening.
Here are the three key reasons supporting the market:
Hopes Of A Hormuz Breakthrough
S&P 500 futures rose 0.13% in early trade, while Nasdaq-100 futures gained 0.38%. Dow Jones Industrial Average futures were hovering just above the flatline. Oil prices climbed in choppy trading as investors assessed mixed signals from the US and Iran over the status of the Strait of Hormuz, a critical route for global energy shipments.
ALSO READ: Oil Prices On Aug. 10: Brent Crude Nears $85 On Uncertainty Over Reopening Of Strait Of Hormuz
Iran has indicated that it is nearing an agreement with Oman on reopening the waterway. However, Tehran continues to rule out direct negotiations with Washington unless certain conditions are met.
Iranian Foreign Minister Abbas Araghchi said there was "no possibility of restarting negotiations" while the US continues to violate the June memorandum of understanding, according to Tasnim News Agency.
The uncertainty has kept oil markets on edge, although any breakthrough on Hormuz could ease concerns over energy supplies and inflation.
Optimism Ahead Of Inflation Data
Investors are also looking ahead to key US inflation readings due this week, with consumer and producer price data expected to provide fresh clues on the Federal Reserve's policy path.
The optimism comes after July employment data showed an unexpected contraction in nonfarm payrolls. With unemployment having ticked higher, investors are betting that weaker economic conditions could also translate into more subdued inflation. That could reduce the likelihood of another Fed rate hike in September, a prospect markets have increasingly been cheering.
Fed funds futures currently imply roughly a 44% probability of a September rate hike, down from 67% a week earlier, according to CME's FedWatch tool.
ALSO READ: US Sheds 23,000 Jobs In July; Stock Futures, Gold Surge On Easing Fed Hike Bets
Strong Momentum From Last Week
The three major US indexes are coming off their strongest weekly performances since April. The S&P 500 ended Friday at an all-time closing high, providing additional momentum heading into the new week.
The Nasdaq-100 index was recently at 29,722.303, up 348.969 points, or 1.19%. Dow Jones futures were at 54,127, down 25 points, or 0.05%. Gold futures were largely flat at around $4,400 an ounce after bullion touched a seven-week high in the previous session.
Investors will also track corporate earnings this week from companies including On Holding, Cava Group, Super Micro and CoreWeave. Across global markets, Asia-Pacific equities closed broadly higher, while European stocks opened largely flat as investors continued to assess developments around the Strait of Hormuz.
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