S&P 500 futures hit seven-month lows as US-Iran uncertainty deepens

S&P 500 futures slip as risk aversion rises amid deepening uncertainty over the Iran conflict.
President Trump said the US could take Iran’s oil, including seizing Kharg Island.
Traders await Nonfarm Payrolls and ISM PMI to shape Fed policy expectations.

Akhtar Faruqui FXStreet

S&P 500 futures fall around 0.6% to 6,370, seven-month lows, during Asian trading hours, ahead of the US regular session open on Monday. US equity futures remain under pressure as risk aversion rises, with uncertainty over a resolution to the Iran conflict deepening.

According to Reuters, US President Donald Trump told the Financial Times that the US could “take the oil in Iran,” including seizing the export hub of Kharg Island, which he claimed is undefended. However, Trump added that discussions with Tehran are “doing extremely well,” with indirect talks via emissaries progressing and a deal potentially achievable “fairly quickly.”

A Wall Street Journal (WSJ) report last week indicated the US Pentagon is considering deploying 10,000 additional troops to Iran. In response, Ebrahim Zolfaqari warned on Iranian state TV that “US troops will be good food for sharks of the Persian Gulf.”

Traders now turn to key US economic data this week, including labor market indicators, particularly Nonfarm Payrolls (NFP) and the ISM Purchasing Managers’ Index (PMI), which are expected to shape expectations for the Federal Reserve (Fed) policy outlook. On the earnings front, Nike, McCormick & Company, and Conagra Brands are scheduled to report results in the week ahead.

S&P 500 FAQs

What is the S&P 500?

The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market. Each company’s influence on the computation of the index is weighted based on market capitalization. This is calculated by multiplying the number of publicly traded shares of the company by the share price. The S&P 500 index has achieved impressive returns – $1.00 invested in 1970 would have yielded a return of almost $192.00 in 2022. The average annual return since its inception in 1957 has been 11.9%.

How are companies chosen to be included in the S&P 500?

Companies are selected by committee, unlike some other indexes where they are included based on set rules. Still, they must meet certain eligibility criteria, the most important of which is market capitalization, which must be greater than or equal to $12.7 billion. Other criteria include liquidity, domicile, public float, sector, financial viability, length of time publicly traded, and representation of the industries in the economy of the United States. The nine largest companies in the index account for 27.8% of the market capitalization of the index.

How can I trade the S&P 500?

There are a number of ways to trade the S&P 500. Most retail brokers and spread betting platforms allow traders to use Contracts for Difference (CFD) to place bets on the direction of the price. In addition, that can buy into Index, Mutual and Exchange Traded Funds (ETF) that track the price of the S&P 500. The most liquid of the ETFs is State Street Corporation’s SPY. The Chicago Mercantile Exchange (CME) offers futures contracts in the index and the Chicago Board of Options (CMOE) offers options as well as ETFs, inverse ETFs and leveraged ETFs.

What factors drive the S&P 500?

Many different factors drive the S&P 500 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the S&P 500 as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

AUD/USD meets support near 0.7150

AUD/USD comes under renewed and quite strong selling pressure ahead of the Asia opening bell on Friday, drifting back toward multi-day troughs near 0.7150, where it seems to have met some decent contention for now. The Aussie’s decline follows the inflation-reignited uptick in the Greenback in response to robust US factory-gate prices in August.

USD/JPY consolidates around 153.50 as bears turn cautious ahead of US inflation

USD/JPY stabilizes above 153.50 during the Asian session on Thursday, but remains near a seven-month low set earlier this week as hawkish BoJ repricing continues to underpin the Japanese Yen. Meanwhile, rising September Fed rate-hike bets and escalating US-Iran tensions help ease US Dollar selling pressure, offering some support to the currency pair ahead of US inflation figures.

Gold remains weak, retargets $4,350

Gold keeps the choppy price action on Thursday, now slipping back toward the $4,350 region per troy ounce amid the robust bounce in the US Dollar as well as rising US Treasury yields across the curve, particularly following US Producer Prices and ahead of Friday’s more relevant US CPI data.

Bitcoin and Gold Outlook: BTC and XAU drop as US PPI broadens rate-hike bets

Cryptocurrency prices are broadly correcting, led by Bitcoin (BTC), which is trading around $77,000 on Thursday, marking four consecutive days of declines. Meanwhile, Gold (XAU) remains sideways, hovering around $4,365, with upside capped below $4,400.

ECB recap: A hawkish hike despite downside growth risks

The European Central Bank (ECB) increased the Deposit Facility Rate to 2.50%, the Refinancing Rate to 2.65% and the Marginal Lending Facility to 2.90%, effective from September 16. The decision was accompanied by a clear warning that the outlook remains highly uncertain, with risks tilted to the upside for inflation and to the downside for growth.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.