Stock futures saw a modest rebound on Sunday night as investors cautiously re-entered the market following a tumultuous week for shares tied to the artificial intelligence sector. Nasdaq-100 futures rose by 0.4%, while Dow Jones Industrial Average futures increased by 0.2%, or 110 points. The S&P 500 futures also gained 0.2%, buoyed by stable oil prices early Sunday.
Despite the uptick in futures, Asian markets were poised for a decline on Monday. Futures for Hong Kong's Hang Seng index were at 24,112, down from the index's previous close of 24,186.83. Similarly, Japan's Nikkei 225 was expected to open lower, with its Chicago futures contracts at 63,985, compared to the last close of 65,324.29. In contrast, Australia's S&P/ASX 200 saw a slight increase of 0.29% in early trading.
The previous week had been challenging for the U. S. markets, with the S&P 500 experiencing a nearly 2% drop, marking its most significant weekly decline since late June. The Nasdaq saw a sharper fall of 4.5%, ending a four-week winning streak. Concerns about the AI sector's health were amplified by reports of slowing growth in AI spending.
Particularly under scrutiny was CoreWeave, a company heavily reliant on debt to build data centers for tech firms. Investors in the corporate bond market have started distancing themselves from CoreWeave, as noted by traders at Goldman Sachs. They observed that the widening spreads across the AI sector have forced investors to reconsider the implications of slowing AI spending growth.
Goldman Sachs traders remarked on the growing pessimism in the market, noting that Friday saw the second-highest volume of put options traded this year.
Meanwhile, geopolitical tensions continued to influence the markets. In the Persian Gulf, ship attacks have increased, and Ukraine and Russia have exchanged strikes on energy infrastructure. On Sunday, Ukraine targeted an oil terminal in St. Petersburg, Russia. Despite these tensions, oil prices slipped slightly in early trading. Brent crude fell 1% to $108.80 per barrel, while U. S. oil prices decreased by 0.2% to $101.18.
In the Asia-Pacific region, markets were set to mostly decline on Monday amid rising tensions in the Middle East. Futures for Hong Kong's Hang Seng index and Japan's Nikkei 225 indicated lower openings. However, Australia's S&P/ASX 200 managed a slight gain. A senior Iranian security official warned of a new military response strategy in the event of further U. S.-Israeli strikes, following reports of multiple attacks on commercial ships near the Arabian Peninsula.
Looking ahead, the market's focus will shift to a series of earnings reports from major companies like Meta Platforms and Tesla this week. Investors are hopeful that these results might provide some stability to the market, which has been rattled by recent developments in the AI sector and geopolitical tensions.
