US stock futures rose at the start of trading on Monday, as investors awaited the release of the US jobs report for July, along with a busy week of corporate earnings, in the first trading session of August, amid attempts by markets to build on the strong gains recorded at the end of last week.
Futures contracts linked to the Dow Jones Industrial Average rose by about 265 points, or 0.9%, while futures contracts for the Standard & Poor's 500 index rose by 0.55%.
Futures contracts for the Nasdaq 100 index, which is dominated by technology stocks, also recorded gains of 0.93%, indicating an improved appetite among investors for high-risk assets at the start of the week.
Asian markets mixed as oil prices fall sharply
Asia-Pacific markets ended trading with mixed performance, after some exchanges gave up some of the gains they made at the end of last week.
South Korea's Kospi index fell by more than 5%, giving up some of the record gains it made on Friday, which were the best in its history.
In Japan, the Nikkei 225 index fell by 0.94%, while Australia’s S&P/ASX 200 index rose by 0.47%, and China’s CSI 300 index fell by 0.98%.
In energy markets, oil prices came under strong pressure after US President Donald Trump announced on Sunday that he was canceling a planned attack against Iran, which revived hopes for geopolitical de-escalation and eased concerns about global energy supplies.
West Texas Intermediate crude for September delivery fell by about 6% to $79.66 a barrel, while Brent crude futures for October delivery declined by 5.16% to $83.39 a barrel.
Strong gains at the end of the week... but will they last?
The three US indices ended last Friday's session with notable gains, with the Dow Jones adding about 276.97 points, or 0.53%, to close at 52,485.03 points.
The Standard & Poor's 500 index rose 0.7% to 7,489.72 points, while the Nasdaq Composite index climbed 1% to close at 25,373.85 points.
With the major indices approaching new record highs, investors are beginning to wonder whether the factors that have fueled the recent rally will be able to continue pushing the market to even higher levels in the coming weeks.
The results of technology raise new questions.
Although major technology companies have generally delivered strong business results, investors have become more cautious about massive spending on artificial intelligence technologies, given the lack of clear evidence that these investments will quickly translate into profit growth.
Megan Hornman, chief investment officer at Verdence Capital Advisors, said the most significant takeaway from the tech companies' results is that investors are no longer willing to continue funding increased capital spending without a clear view of the expected return on profits.
She added that the end of the earnings season for giant technology companies raises an important question about the catalysts that could drive markets to continue rising, noting that the second half of the year, and August in particular, may witness greater risks than the previous period.
A week packed with earnings and economic data.
This week, attention is also turning to the earnings results of a number of companies that are seen as an indicator of the strength of American economic activity and consumption.
McDonald's, Kraft Heinz, Costco and Walt Disney are expected to announce their financial results, along with technology companies such as Palantir, and chipmakers, most notably Advanced Micro Devices (AMD).
These findings are of particular importance because they may provide a clearer picture of the state of the US economy outside of the giant technology companies.
The jobs report is at the forefront of investors' concerns.
In addition to the earnings season, investors are anticipating a series of US labor market data releases throughout the week, culminating on Friday with the monthly jobs report, which is one of the most important indicators influencing expectations of the Federal Reserve's monetary policy.
Forecasts indicate that the US economy added approximately 87,500 new jobs during July, compared to 57,000 jobs in June, according to FactSet estimates.
Conversely, the unemployment rate is expected to rise slightly to 4.3%, compared to 4.2% in the previous month, data which could have a direct impact on investors' expectations regarding the path of US interest rates in the coming months.
