US equity futures rallied on Monday night as oil prices slumped and investors grew more optimistic that negotiations between the United States and Iran could lead to an agreement to end the war.
Dow Jones futures rose 441 points, or 0.9%, while S&P 500 futures gained 0.9% and Nasdaq-100 futures advanced 1.2%. US markets were closed on Monday for the Memorial Day holiday.
Investor sentiment improved after President Donald Trump said talks with Iran were “proceeding nicely”, although he warned the US could still take military action if negotiations failed.
Markets have increasingly focused on signs that diplomatic discussions may eventually lead to the reopening of the Strait of Hormuz and a reduction in geopolitical risk across energy markets.
Last week, Wall Street posted another positive performance, supported by strong corporate earnings and easing oil prices. The S&P 500 rose 0.9% for the week, marking its longest weekly winning streak since late 2023. The Dow Jones Industrial Average gained 2.1%, while the Nasdaq Composite added 0.5%.
Investors also continued monitoring expectations for US interest rates as inflation pressures linked to energy prices remained elevated.
Australian Market Outlook
Australian shares are expected to open higher as improving risk sentiment and falling oil prices support global equity markets.
S&P/ASX 200 futures are up 35 points, or 0.4%, to 8,690.
Investor sentiment locally is likely to remain sensitive to developments surrounding negotiations between the US and Iran, with markets increasingly focused on the tone of diplomatic headlines rather than the precise timing of any agreement.
The Australian dollar also strengthened overnight as the decline in oil prices boosted broader risk appetite.
On the economic front, investors will monitor US consumer confidence data due later today. In New Zealand, the central bank is widely expected to leave interest rates unchanged at its policy meeting on Wednesday.
