U.S. stock futures were broadly unchanged early Tuesday as investors assessed the outlook for Federal Reserve interest rates, higher oil prices and renewed military exchanges between the United States and Iran.
Energy markets extended their recent gains amid concerns about shipping through the Strait of Hormuz, while Japanese government bond yields increased ahead of U.S. labour market and manufacturing data.
U.S. stock futures little changed ahead of jobs data
By 03:40 ET, S&P 500 futures, Nasdaq 100 futures and Dow futures were broadly flat.
Wall Street had declined in the previous session as U.S. Treasury yields and oil prices increased.
Investors are awaiting Friday’s nonfarm payrolls report for further information on U.S. labour market conditions and the potential implications for Federal Reserve monetary policy.
Before then, the July Job Openings and Labor Turnover Survey and ISM manufacturing index are scheduled for release on Tuesday.
Japan 10-year government bond yield rises above 3%
Japan’s benchmark 10-year government bond yield moved above 3% on Tuesday for the first time since September 1996.
The yield has more than tripled since 2024 as the Bank of Japan has moved away from its previous ultra-loose monetary policy.
Higher energy costs associated with the U.S.-Iran conflict have also contributed to inflation concerns in Japan, while investors are assessing the possibility of further interest rate increases from the Bank of Japan.
Higher domestic bond yields could affect investment allocations by Japanese investors by increasing the relative returns available on Japanese fixed-income assets compared with overseas securities.
Oil prices extend gains amid U.S.-Iran developments
Oil prices moved higher on Tuesday as markets assessed the potential for further military action involving the United States and Iran and the implications for energy supplies through the Strait of Hormuz.
By 01:02 ET, Brent crude futures were up 1.1% at $91.51 per barrel, while WTI futures gained 1.4% to $86.99. Both contracts had risen nearly 3% during the previous session.
The latest developments followed U.S. strikes against Iranian military targets on Larak Island and subsequent Iranian missile attacks on U.S. military facilities in Jordan.
President Donald Trump has raised the possibility of further U.S. military action against Iran.
Higher crude prices can contribute to increased transportation, production and consumer energy costs, making their potential impact on inflation one of the factors being monitored by financial markets.
Strait of Hormuz shipping remains in focus
Investors continued to monitor commercial shipping through the Strait of Hormuz because of its role in transporting crude oil and petroleum products from Middle Eastern producers.
On Monday, a tanker was struck by three unidentified projectiles while exiting the strait, according to the United Kingdom Maritime Trade Operations agency.
The extent and duration of any disruption to shipping remain uncertain. A sustained reduction in traffic through the waterway could affect global energy supplies and prices.
JOLTS, ISM and Fed comments due Tuesday
The July JOLTS job openings report and ISM manufacturing index are scheduled for release later Tuesday, providing further information on the U.S. labour market and manufacturing sector.
Federal Reserve Governor Michael Barr is also scheduled to speak.
Investors are assessing the possibility of another interest rate increase after Federal Reserve Chair Kevin Warsh recently adopted a more hawkish tone.
The upcoming economic releases, including Friday’s nonfarm payrolls report, will provide additional data ahead of the Federal Reserve’s September policy decision.