U.S. equity futures traded higher on Thursday as investors monitored renewed military action between the United States and Iran while preparing for another busy earnings day led by PepsiCo (NASDAQ:PEP).
Although crude oil prices eased slightly, they remained well above levels seen before the latest escalation in the Middle East, keeping concerns over inflation and global energy supplies firmly in focus.
Futures Point to Higher Open
As of 02:53 ET (06:53 GMT), Dow Jones futures were higher by 82 points, or 0.2%. S&P 500 futures added 0.3%, while Nasdaq 100 futures outperformed with a gain of 0.5%.
The previous session ended mixed, with the Dow Jones Industrial Average falling 1.1% and the S&P 500 slipping 0.3%, while the Nasdaq Composite posted a modest 0.2% gain thanks to continued strength in technology stocks.
Markets reacted cautiously after U.S. President Donald Trump said the ceasefire framework with Iran was “over”, reviving fears that higher oil prices could complicate the inflation outlook.
Technology shares helped cushion broader losses. Nvidia extended gains after reports suggested China may allow limited domestic access to the company’s H200 AI chips.
Minutes from the Federal Reserve’s June meeting also attracted attention. Analysts at Vital Knowledge described the overall tone as “fairly dovish tone on the monetary policy outlook”, despite policymakers remaining alert to inflation risks linked to energy prices.
Fresh Conflict Keeps Markets on Edge
Military operations continued overnight as the United States launched strikes against approximately 90 Iranian military targets, including air defence systems and missile facilities.
Iran responded with attacks targeting U.S. military installations in Kuwait and Bahrain, while the Islamic Revolutionary Guards Corps warned that additional strikes could follow if further U.S. military action takes place.
The latest exchange has raised fresh doubts over the durability of the temporary ceasefire reached in June. Negotiations remain complicated by disagreements over the Strait of Hormuz, Iran’s nuclear programme and broader regional conflicts.
Speaking after the NATO summit, President Trump said Iran wanted to “make a deal so badly”, although Iranian officials have not publicly indicated that negotiations have resumed.
Oil Holds Above Pre-Conflict Levels
Brent crude traded below $78 per barrel, slipping 1.0% to $77.26 by 03:42 ET.
Despite the decline, prices remain considerably above the roughly $71 level recorded before the latest escalation, as traders continue to price in the risk of disruption to shipping through the Strait of Hormuz, one of the world’s most important energy transport routes.
Higher energy prices continue to cloud the inflation outlook and could influence future interest-rate decisions by major central banks.
PepsiCo Results Take Centre Stage
Investors are also awaiting quarterly earnings from PepsiCo before the opening bell.
When reaffirming its annual guidance in April, Chief Financial Officer Steve Schmitt warned that the “macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts.”
Markets will be looking for updates on how higher transportation, energy and raw material costs are affecting margins. While Schmitt acknowledged that price increases remain an option, he stressed they would only be implemented if necessary.
PepsiCo shares have gained approximately 0.2% since the beginning of the year.
China’s Inflation Signals Uneven Recovery
China’s latest inflation figures painted a mixed picture.
Consumer inflation slowed to 1.0% year-on-year in June, while producer inflation accelerated to 4.1%, its strongest reading since July 2022.
Analysts said rising prices for electronics linked to AI-related chip shortages partly offset weaker pricing across many industrial sectors.
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