Dow Jones futures gain as US may announce coalition to open Hormuz

Dow Jones futures gain 0.33% to trade near 46,750 during European hours ahead of the US regular market open on Monday. S&P 500 and Nasdaq 100 futures rise 0.49% and 0.51% to trade around 6,670 and 24,520 at the time of writing.

US stock futures rise as risk aversion eases on reports that the United States (US) may announce a coalition to escort ships through the Strait of Hormuz. Moreover, US Energy Secretary Chris Wright said that he expects the US-Israel conflict with Iran to end within “the next few weeks,” potentially allowing oil supplies to recover and energy prices to decline.

Wall Street posted losses in the previous session, with the Dow Jones Industrial Average fell 0.26%, the S&P 500 dropped 0.61%, and the Nasdaq 100 lost 0.62%. US markets soared as geopolitical risks weighed on sentiment. Higher energy prices and rising inflationary pressures also reduced expectations that the Federal Reserve will cut interest rates.

Traders are likely to adopt caution amid potential escalation in Middle East tensions after United States (US) forces reportedly targeted every military site on Kharg Island over the weekend, a hub that handles nearly 90% of Iran’s oil exports. Iran has warned it could retaliate against any US-linked oil facilities in the region.

On the Federal Reserve (Fed) policy front, the US central bank is expected to keep interest rates unchanged on Wednesday. Traders will closely monitor policymakers’ guidance for the remainder of the year, particularly regarding inflation risks stemming from the recent surge in energy prices.