US Stock Futures Decline as Crude Oil Prices Surge Following Reports of Attack on US Warship in Strait of Hormuz

US Stock Futures Plunge Amid Escalating Tensions in the Middle East

US stock futures turned sharply lower on Monday after reports of escalating tensions in the Middle East, including claims that a US warship was hit in the Strait of Hormuz. The developments have heightened concerns over potential disruptions in one of the world's most critical oil shipping routes.

Market Reaction

US stock futures contracts linked to the S&P 500 and Nasdaq 100 fell about 0.5 percent each as of around 6:15 am EDT (3:45 pm IST), reversing earlier gains. Dow Jones futures were trading down 0.8 percent. GIFT Nifty futures fell around 0.5 percent, or about 115 points, to 24,090.

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The decline in US futures came after Iran's Fars news agency reported that two missiles had struck a US warship that had ignored warnings. Iran's army separately claimed it had prevented US warships from entering the Strait of Hormuz.

Global Market Impact

The risk-off sentiment was visible across global markets, with Europe's Stoxx 600 index declining about 1 percent, extending losses after the reports emerged. Brent crude prices spiked sharply, rising more than 5 percent to trade around $114 per barrel, as the developments heightened concerns over potential disruptions in one of the world's most critical oil shipping routes.

Recent Market Trends

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The sharp reversal in futures comes after a positive start to the session, when US contracts were pointing higher following strong momentum in global equities. Earlier in the day, Nasdaq 100 futures had risen about 0.3 percent and S&P 500 futures were up 0.1 percent, supported by optimism around AI-driven growth and better-than-expected earnings from megacap technology companies.

Investor sentiment had remained resilient in recent weeks despite ongoing geopolitical tensions, with global equities rallying for more than a month. US markets, in particular, have been supported by strong corporate earnings, with the S&P 500 notching five consecutive weeks of gains and a relatively low proportion of companies missing analyst estimates.

However, the latest developments around the Strait of Hormuz have triggered a swift reassessment of risk, dragging equity futures lower while pushing energy prices higher.