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Stocks Down Pre-Bell as Traders Weigh Renewed US-Iran Tensions

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Stocks Down Pre-Bell as Traders Weigh Renewed US-Iran Tensions

US equity futures were tracking in the red on Tuesday as investors weigh Middle East tensions after the US and Iran recently exchanged strikes.

The S&P 500 and the Dow Jones Industrial Average declined 0.5% each in premarket activity, while the Nasdaq was off 0.8%. The indexes finished the previous trading session lower.

President Donald Trump reportedly told Fox News on Monday that the US will respond to Iran's attacks on its military bases in the Middle East.

"We're going to hit them hard," Trump reportedly said. "There will be a response."

Iran reportedly attacked US bases in Jordan and the United Arab Emirates on Monday, in retaliation for Washington striking Iranian rocket launchers on Tehran's Larak Island. The US attack was the first confirmed military strike against Iran since late July and comes after Washington launched an economic campaign last week to cut off financial channels that support Tehran.

Iranian President Masoud Pezeshkian reportedly said Monday that Iran is not seeking to engage in a war with the US, but will respond firmly to any acts of aggression.

West Texas Intermediate crude oil rose 2.7% to $88.05 a barrel before the opening bell, while Brent increased 2.2% to $92.47.

The UK Maritime Trade Operations said Monday that a tanker was reported to have been struck by three unknown projectiles while transiting the Strait of Hormuz.

"These developments have once again reduced the prospects of bringing the conflict to an end," Saxo Bank said in a Monday report. "However, with an estimated (6 million to 8) million barrels per day of crude flowing through the strait, the upside risk is for now being capped."

Treasury yields were trending higher in premarket action, with the two-year rate gaining 1.2 basis points to 4.36% and the 10-year rate adding 3 basis points to 4.79%.

Traders also await the first batch of fresh labor data this week, with the Job Openings and Labor Turnover Survey for July out at 10 am ET. The ADP Employment report, the Challenger, Gray & Christmas job cut report and the government's nonfarm payrolls data, all for August, are due later in the week.

US nonfarm payrolls are projected to rebound stronger than expected in August, Oxford Economics said in a note Monday, describing labor market conditions as balanced. The brokerage expects nonfarm payrolls to have increased by 95,000 in August, compared with the Bloomberg-polled consensus of a 55,000 increase.

Tuesday's economic calendar also has the final Purchasing Managers' manufacturing index for August at 9:45 am, followed by the Institute for Supply Management's manufacturing index for the same month at 10 am.

Federal Reserve Governor Michael Barr is slated to speak at 9:05 am.

Shares of GoPro (GPRO) surged 89% pre-bell following media reports that YouTube creator Mark Fischbach has become the company's largest single shareholder. Robinhood Markets (HOOD) inclined 1.9%.

Palo Alto Networks (PANW), Dell Technologies (DELL), Credo Technology (CRDO) and MongoDB (MDB) are expected to release their latest financial results after the markets close Tuesday. Medtronic (MDT) posts earnings before the bell, among others.

Gold slipped 1.3% to $4,423 per troy ounce, while bitcoin decreased 1.4% to $77,924.

What else is happening in US Markets?

Japan's Manufacturing PMI Climbs in August on Semiconductor Demand, S&P Says
US Markets

Japan's Manufacturing PMI Climbs in August on Semiconductor Demand, S&P Says

Japan's manufacturing sector growth accelerated in August, propelled by strong demand for semiconductors and artificial intelligence-related products,The final S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) rose to 54.9 in August from 54.5 in July. While easing slightly from the flash estimate of 55.1, the reading marked the highest level since April and the second-steepest expansion since January 2022. A reading above 50 indicates improved sector performance, while anything below signals contraction.The increase in new business was the sharpest seen since January 2018 due to a rise in new orders, particularly from the technology sector, which saw the most significant increase in over eight and a half years, S&P said.New export orders surged the quickest since 2018 following demand coming from North America, Southeast Asia, and China, according to S&P.Employment also surged amid an expansion of operating capacity, with job creation rates accelerating the fastest since February 2018, S&P said.Despite the rise in demand, price pressures are still a "key concern" due to the tensions in the Middle East, with costs impacted by chokepoints in the Strait of Hormuz, but "there are tentative signs that delivery delays have eased somewhat over the past two months," S&P Global Market Intelligence Economics Associate Director Annabel Fiddes said in a note.Japan's manufacturing sector remained optimistic about output increases over the next year in August, with positive sentiments the highest in six months.Companies also expect further increases in customer demand for AI and semiconductors, according to S&P Global.

Nikkei 225
Private Survey Shows China's Manufacturing Activity Accelerates in August, Diverging From Government Data
US Markets

Private Survey Shows China's Manufacturing Activity Accelerates in August, Diverging From Government Data

China's manufacturing sector expanded at a faster pace in August, contrasting with official figures that showed broader factory activity remaining in contraction territory.The seasonally adjusted RatingDog China General Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 51.5 in August from 50.9 in July, maintaining its position above the 50.0 neutral threshold that separates growth from contraction.The improvement was driven by an increase in new orders and demand, which elevated backlogs and created higher cost pressures for manufacturers. Meanwhile, employment remained relatively steady, and business confidence for the coming 12 months stayed positive."New export business rose at the fastest pace in six months, driven by strong growth in the consumer goods sector. Manufacturing output expanded for the ninth successive month, with the rate of growth reaching a three-month high, supported by stronger demand and capacity expansion," said RatingDog founder Yao Yu.In contrast, the official manufacturing PMI released by the National Bureau of Statistics on Monday came in at 49.8 for August. While improving from July's reading of 49.2 and beating the consensus market forecast of 49.5, the official index remained below the 50-point line for the second consecutive month.Analysts from ANZ noted that the data highlights an uneven economic transition within China."Exports are resilient, but the local service sector has not benefited much," ANZ economists Raymond Yeung, Zhaopeng Xing and Vicky Xiao Zhou said in a Monday note. They added that rising input and output price pressures reflect renewed tensions in the Middle East, which could point toward a firmer Producer Price Index print.

Shanghai Composite^SZSE
Australia's Manufacturing Sector Remains Flat in August Amid Mixed Performance
US Markets

Australia's Manufacturing Sector Remains Flat in August Amid Mixed Performance

Australia's manufacturing sector remained unchanged in August as the industry remained flat, with growth in new orders offset by a slight fall in production.The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Managers' Index (PMI) was unchanged at 52 in August, still above the 50-mark that signals expansion.Business confidence and new orders strengthened in August, supporting further job creation, though production fell slightly and purchasing was scaled back amid marked input costs and supply-chain pressures.New orders rose at the sharpest pace since January, with new export orders also returning to growth, while manufacturer confidence strengthened for the fourth consecutive month from April's recent low to reach its highest since February.Job creation helped firms reduce backlogs of work, which fell to their largest extent in just over a year, with staffing increases reflecting a mix of contract workers and longer-term hires linked to expansion plans.Input cost inflation quickened slightly in August, though it remained below levels typically seen since the start of the Middle East conflict, with higher freight and fuel costs widely cited, while output price inflation eased for the third consecutive month to its slowest since February.Supply chain disruptions linked to the Middle East conflict continued to weigh heavily on the sector, with supplier delivery times lengthening sharply and panellists noting international shipping delays and delivery consolidations by suppliers seeking to limit freight costs.

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