Equity Futures Recover as Oil Retreats, But Geopolitical Tensions Weigh on Sentiment

Dow Jones futures rose 0.35% to approximately 52,070 during European morning trading on Friday. S&P 500 futures and Nasdaq 100 futures also edged higher, gaining 0.21% and 0.08% respectively, reaching around 7,460 and 28,650.

The rebound in US equity futures followed a decline in crude oil prices after three consecutive days of gains, easing inflation concerns and expectations for a tighter Federal Reserve policy. However, trader sentiment remained cautious amid escalating conflict in the Middle East. Following Houthi attacks on two Saudi tankers in the Red Sea, the US conducted its 13th consecutive night of retaliatory strikes against Iran. President Donald Trump amplified warnings of unprecedented military action if hostilities continue, sustaining risks to oil supplies.

Sustained energy-driven inflation continues to influence monetary policy expectations. CME FedWatch data indicates markets are pricing in a 31.5% chance of a Fed rate hike this month and a 78.1% probability of at least a 25-basis-point increase in September.

The futures recovery provides a short respite after a steep sell-off sparked by disappointing big-tech earnings. During Thursday’s regular trading session, the Dow Jones fell 0.97%, with the S&P 500 (-1.2%) and Nasdaq (-2.2%) recording their worst single-day declines since late June.

The drop was led by technology leaders. Tesla plunged nearly 15% after missing second-quarter earnings estimates—its steepest single-day loss since March 2025—while Alphabet fell 7% following an increase in its full-year capital expenditure guidance. All major indexes remain on course for weekly losses, with the Nasdaq leading the declines.

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