U.S. Stocks May See Initial Weakness As Crude Oil Prices Surge

(RTTNews) - Stocks may move to the downside in early trading on Monday, giving back ground after turning in a strong performance last week. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

The downward momentum on Wall Street comes as the price of crude oil surges amid the continued exchange of attacks between the U.S. and Iran.

U.S. Central Command said it completed a new wave of offensive strikes against Iran on Sunday, hitting dozens of targets at multiple locations with precision munitions.

Tehran responded by attacking Gulf Arab states, including Bahrain, Kuwait, Qatar, Jordan and Oman, further straining the fragile ceasefire between the two countries.

U.S. crude oil futures are soaring by more than 4 percent amid conflicting statements from the U.S. and Iran about whether the Strait of Hormuz remains open amid the renewed attacks.

A steep drop by shares of SK Hynix (SKHY) is also likely to weigh on the tech sector, with U.S.-listed shares of the South Korean chipmaker plunging by more than 9 percent in pre-market trading after soaring by more than 13 percent during its debut last Friday.

However, traders may be reluctant to make more significant moves ahead of the release of earnings news from several financial giants as well as the release of key inflation data.

"Following stronger inflation readings earlier this year and a resilient labour market, investors are keen to determine whether underlying price pressures remain persistent despite the recent fall in energy prices," said Daniela Hathorn, Senior Market Analyst at Capital.com.

"A hotter-than-expected reading would reinforce the higher-for-longer narrative and could add further support to the dollar and bond yields," she added. "Conversely, a softer report would help offset some of the inflation concerns stemming from renewed geopolitical tensions and could provide equities with a much-needed boost."

Stocks showed a lack of direction early in the session on Friday but moved mostly higher over the course of the trading day. The major averages all moved to the upside, although buying interest remained relatively subdued.

The major averages pulled back off their best levels going into the end of the day but still posted modest gains. The Dow rose 149.60 points or 0.3 percent to 52,637.01, the Nasdaq increased 74.72 points or 0.3 percent to 26,281.61 and the S&P 500 climbed 31.75 points or 0.4 percent to 7,575.39.

For the week, the tech-heavy Nasdaq surged by 1.7 percent, the S&P 500 jumped by 1.2 percent and the Dow advanced by 0.5 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Monday. South Korea's Kospi nosedive by 9 percent, China's Shanghai Composite Index plunged by 2.1 percent and Japan's Nikkei 225 Index tumbled by 1.9 percent.

Meanwhile, the major European markets are little changed on the day. While the U.K.'s FTSED 100 Index is down by 0.2 percent, the French CAC 40 Index is just above the unchanged line and the German DAX Index is up by 0.1 percent.

In commodities trading, crude oil futures are spiking $2.63 to $74.04 a barrel after sliding $0.67 to $71.41 a barrel last Friday. Meanwhile, after falling $27.10 to $4,113.70 an ounce in the previous session, gold futures are slumping $45.50 to $4,068.20 an ounce.

On the currency front, the U.S. dollar is trading at 162.14 yen versus the 161.69 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1427 compared to last Friday's $1.1413.