Futures rebound as Brent crude dips below $100, easing oil fears

US equity futures rebounded in early trading Monday as Brent crude oil retreated from the $100-a-barrel threshold, easing fears that had rattled markets last week.

S&P 500 futures rose 0.3% as of 6:00 a.m. ET, according to data from Zero Hedge. The move followed the index’s biggest single-day drop this month on Thursday. Treasury yields hovered just below their highest levels this year, while Brent crude fell more than 3% toward $97 a barrel.

The reversal came after President Trump on Friday declined to continue strikes on Iran, according to a report from Rabobank senior macro strategist Benjamin Picton. The pause was extended over the weekend and reciprocated by the Iranians, marking the first ceasefire in the conflict in almost a fortnight.

According to Axios, as cited by Picton, Trump’s advisors had provided the president with attack plans for the day, but CENTCOM commander Admiral Brad Cooper reportedly advised against further strikes, arguing that Iran’s ability to disrupt shipping in the Strait of Hormuz had already been substantially degraded and that the aerial campaign had reached the limits of its effectiveness.

The New York Times reported that General Dan Caine, Chairman of the Joint Chiefs of Staff, had cautioned the president that further escalation was possible but would dangerously deplete CENTCOM’s stock of interceptor missiles. Trump denied the report, telling the Wall Street Journal “we have far more [interceptors] than we need.”

In a further hopeful sign, an Omani team of negotiators has reportedly met with counterparts in Tehran to discuss arrangements to re-open the Strait of Hormuz. Iranian foreign ministry spokesman Baqaei said the talks had been “useful” and that progress had been made, but that there was no change in the status of the strait at this point.

The easing of geopolitical tensions drove a broad market relief. “Massive relax” was how Picton described the shift, noting that Brent crude had fallen below $92 a barrel and sovereign yields were lower across the board.

In premarket trading, Tesla led gains among the Magnificent Seven stocks, rising 1.3% after plunging about 15% on Thursday. Microsoft gained 1.1%, Alphabet rose 0.7%, Meta added 0.7%, Amazon climbed 0.5%, and Apple edged up 0.2%. Nvidia slipped 0.4%.

Intel jumped 4% after the chipmaker’s third-quarter forecast shattered Wall Street estimates. The company forecast sales of $15.8 billion to $16.8 billion in the third quarter, with even the low end of that range easily clearing the $15.1 billion average analyst estimate.

Oracle rose 2.6% after the software company said it had been awarded a 10-year IDIQ contract by the US Department of Defense under its Enterprise Software Initiative, valued at $3.31 billion for the first five years and up to $6.99 billion if options are exercised.

Amkor Technology rallied 11% after announcing a $1.5 billion multi-year binding agreement with Nvidia to develop advanced semiconductor packaging and test technologies for next-generation AI platforms.

Despite the relief rally, analysts cautioned that the war is far from over. Michael Hewson, analyst at iForex, said he was surprised by how well markets are holding up despite the sharp increase in oil prices. “Next week is a really big week and it could be make-or-break in terms of where markets go next,” he said. “There’s an awful lot more nervousness now about capex, particularly when you’re talking about AI and where’s the return on investment coming.”

The Wall Street Journal reported over the weekend that escalating tit-for-tat between the Saudis and the Houthis threatens to conflagrate into all-out war, with Houthi attacks on Saudi Aramco infrastructure at the critical port of Yanbu.

Israeli Prime Minister Netanyahu said the war would continue until the Iranian regime fell or gave up its nuclear ambitions. Israel was reportedly bracing for escalation, with the Jerusalem Post noting that public bomb shelters had been re-opened in major cities.

Sebastian Raedler, head of European strategy at Bank of America, cautioned the global equity picture is “not bullish,” and investors aren’t being compensated for risk. “Margin expectations at an all-time high, you’ve expected five-year forward earnings growth at an all-time high, you’ve got market cap-to-GDP globally at an all-time high and you’ve got risk premia at a 20-year low,” he said.

This week, the Federal Reserve, Bank of England and Bank of Japan will all meet to set policy rates. None are expected to raise their rate targets, but the inflationary impacts of war will loom large in their deliberations. Q2 GDP readings for the United States and the Eurozone, along with Q2 PCE for the former and July CPI for the latter, are also due.