Oil Holds Gains, US Futures Slip on War Confusion: Markets Wrap

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(Bloomberg) — US equity futures edged lower and oil held gains as Washington struggled to get efforts toward an Iran peace deal back on track.  

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S&P 500 contracts slipped in early Asian trading after US benchmarks closed at record highs in New York on Monday. West Texas Intermediate crude was steady after notching its biggest gain in about a month in the previous session. Asian equity futures pointed to a modest gain in Japan, with losses in Hong Kong and Australia.

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President Donald Trump and Israeli Prime Minister Benjamin Netanyahu offered differing accounts of a call about the fighting in Lebanon, the latest example of confusing signals on progress to end the war, now in its fourth month.

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Still, the S&P 500 notched its eighth straight advance, its longest winning streak since May 2025, as signs of the AI boom continued to emerge. Alphabet Inc. unveiling plans to raise $80 billion through equity offerings, including an investment deal with Berkshire Hathaway Inc., highlighting the scale of spending tied to the race to build AI infrastructure.

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Financial markets continued to get whipsawed by multiple geopolitical headlines after an escalation in Middle East hostilities jeopardized peace negotiations. While investors still see a path toward a US-Iran agreement, conditions in the Strait of Hormuz remain fragile, keeping energy prices in focus as a key driver of the near-term outlook for inflation and interest rates.

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“Expectations for a US-Iran agreement remain fluid,” said Jason Pride and Michael Reynolds at Glenmede. “Recent strikes and conflicting statements from both sides highlight that key details remain unresolved.”

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After a flare up of violence in Lebanon threatened to derail negotiations to end the war in Iran, Trump said Israel and Hezbollah had agreed to stop fighting. Trump touted a “productive” call with Israeli Prime Minister Benjamin Netanyahu, along with “very good” talks with Hezbollah.

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The comments helped ease concerns after Iran’s semi-official Nour News reported earlier that Tehran had suspended exchanges with Washington in response to Israel’s escalation in Lebanon.

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Elsewhere, the dollar strengthened after data showed US manufacturing activity in May expanded at the fastest pace in four years. The Institute for Supply Management’s report also indicated that input costs continued to rise sharply, with its prices-paid gauge hovering near levels last seen in 2022.

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Investors are now looking ahead to a fresh round of economic data, culminating in Friday’s May jobs report, for clues on the health of the US economy and the Federal Reserve’s policy path under Chairman Kevin Warsh.

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“There is a creeping view that US growth could be re-accelerating as AI investment seeps through the broader economy,” Chris Turner, head of foreign-exchange strategy at ING Bank, wrote Monday. “This week’s data should further support the growing narrative that the Fed can be comfortable with its full employment mandate and can focus squarely on the upside risks to inflation.”