U.S. equity futures traded slightly lower on Monday after President Donald Trump dismissed Iran’s response to a U.S.-backed peace proposal as “unacceptable,” dampening hopes for a rapid end to the conflict in the Middle East. Meanwhile, oil prices continued to rise as traders reacted to renewed uncertainty surrounding global energy supplies.
Investors were also monitoring continued momentum in artificial intelligence-related stocks and preparing for a busy week of economic data, including closely watched U.S. inflation figures.
Futures Slip After Record Highs
By 03:36 ET, futures tied to the Dow Jones Industrial Average had fallen 79 points, or 0.2%. S&P 500 futures were down 8 points, or 0.1%, while Nasdaq 100 futures slipped 25 points, also around 0.1%.
The moves followed another strong week on Wall Street, with both the S&P 500 and Nasdaq Composite reaching fresh record highs and extending their rally into a sixth consecutive week.
Much of the recent market strength has been driven by optimism that the Trump administration may be seeking a route toward ending the more than two-month conflict involving Iran, which has disrupted global trade flows and heightened concerns over economic stability. At the same time, enthusiasm around artificial intelligence has remained a major support for equities, fuelled by heavy investment from major technology companies into data centre infrastructure.
“For stocks stateside, the bull case is simply one that’s too robust to fight right now, as geopolitical optimism combines with stellar earnings growth, and a return of euphoria around the AI theme,” said Michael Brown, Senior Research Strategist at Pepperstone, in a note.
“Unless and until any of those factors shift, the path of least resistance should continue to lead higher, with dips remaining relatively shallow for now, and likely being used as buying opportunities by most.”
Trump Dismisses Iran Counterproposal
Iranian state television reported that Tehran had submitted a response to a U.S. proposal intended to end the conflict, focusing on halting military operations across all fronts while also seeking compensation for wartime damage.
Iran also reiterated its control over the Strait of Hormuz, the strategically important shipping route through which around one-fifth of global oil supply passes. The waterway has faced severe disruption during the conflict and remains effectively blockaded by both Iranian and U.S. forces.
Shortly after reports emerged regarding Iran’s response, Trump reacted on social media, writing: “I don’t like it — TOTALLY UNACCEPTABLE.” He did not provide additional details.
Washington has been pushing for a rapid conclusion to the conflict before moving into broader negotiations over key issues, particularly Iran’s nuclear programme.
Oil Prices Continue to Rise
Oil markets extended their gains as geopolitical tensions persisted, with prices remaining well above levels seen before the outbreak of the conflict.
Brent crude futures, the global benchmark for oil prices, rose 3.4% to $104.69 per barrel.
“One would expect the market to become increasingly fatigued by the deluge of headlines and the back-and-forth. However, oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf,” analysts at ING said in a note.
Trump Set for China Visit
Despite the latest diplomatic setback, analysts suggested that Trump’s upcoming visit to China could potentially support future peace discussions.
Chinese state media reported on Monday that Trump is expected to travel to China between May 13 and 15 for a summit with President Xi Jinping. The visit would mark the first major trip to Beijing by a U.S. president in nearly a decade and is intended to ease tensions between the world’s two largest economies.
Alongside discussions surrounding the Iran conflict, Trump and Xi are also expected to address trade tariffs and Taiwan. Media reports indicated that both sides may seek to extend the trade truce agreed in October.
Inflation Data in Focus This Week
Markets are also turning attention toward this week’s upcoming U.S. consumer price index report, which is expected to provide fresh insight into inflation trends.
The April CPI figures, due on Tuesday, could offer early indications of how the Iran conflict and higher energy prices are affecting inflationary pressures in the U.S. economy. In March, inflation accelerated sharply, largely driven by rising gasoline prices.
Economists expect headline annual inflation to rise to 3.7% in April from 3.3% previously. On a monthly basis, however, consumer prices are forecast to slow to 0.6% from 0.9%.
Core CPI, which excludes volatile food and energy prices, is projected to edge up by 0.3%. Analysts continue to watch closely for signs that rising crude oil costs are beginning to feed through into a broader range of consumer goods and services beyond fuel prices.