Lower Open Likely For US Markets: Oil, Gold Up

Lower open likely for the U.S markets on Friday after the U.S. stock index futures looked subdued on Friday morning.

Rising tensions in the Middle East after Iran’s downing of a U.S drone and the Trump administration's reported moves for a retaliatory strike against Iran have affected market sentiments.

At 6:15 a.m. ET, Dow Jones futures indicated a lower open of 29 points and were down 38 points. Futures on the S&P and Nasdaq also stood lower.

On the data front, investors will monitor June manufacturing and services PMI at 0945 ET, and data on existing home sales for May will be due at 10 ET.

CarMax will report its latest earnings on Friday.

Asian markets mixed

Asia Pacific markets showed mixed trends on Friday as tensions in the Middle East over Iran escalated.

Japan’s Nikkei 225 closed 0.95 percent lower while the Topix index slipped 0.9 percent.

South Korea’s Kospi fell 0.27 percent. Australia’s ASX 200 slipped 0.55 percent. Chinese stocks bucked the trend and jumped on Friday. The Shanghai Composite was up 0.5 percent. But Hong Kong’s Hang Seng index declined 0.5 percent in the final hour of trading.

European stocks moved slightly higher Friday morning, as fears of a military confrontation rose in the Middle East after Iran shot down a U.S spy drone. The pan-European Stoxx 600 jumped 0.1 percent with most sectors in positive territory.

Oil rises over U.S-Iran tensions

Oil prices surged to $65 per barrel as fears of a U.S. military strike on Iran escalated concerns that oil supply from the Middle East will be disrupted. The region accounts for more than 20 percent of the world’s oil output.

Brent crude jumped 0.66 percent to $64.87 a barrel by 0850 GMT. It jumped 4.3 percent on Thursday and had the first weekly gain in five weeks.

The U.S. West Texas Intermediate crude also jumped 0.38 percent at $57.28 a barrel. The U.S. benchmark had a 5.4 percent surge on Thursday.

“Crude prices are rising on increased Middle East tensions after Iran shot down a U.S. drone in what the U.S. claims as international airspace,” said Jason Gammel of Jefferies.

Trump ordered Iran strike but backtracked

Meanwhile, reports said the U.S president Donald Trump sanctioned a military strike against Iran but backtracked at the last moment. Trump approved military strikes on many Iranian targets and they would have happened before Friday dawn, but retreated from the plan on Thursday night.

According to the report by the New York Times, military planes and ships were ready to attack Iranian targets including radar and missile batteries. But the order was called off and no missile was fired.

The report quoted several senior administration officials who were part of the deliberations. The attack was in response to Iran’s downing of an unmanned American spy drone valued $130 million. However, some officials still expect the operation is only paused and may happen.

Gold hits a record high

Gold jumped more than 1.5 percent on Friday and broke the barrier of $1,400 per ounce for the first time in 6 years, as hints of a rate cut and Middle East tensions hit the U.S. dollar and pulled down Treasury yields.

Spot gold soared 1.2 percent at $1,404.35 per ounce as of 0537 GMT, after hitting a high of $1,410.78. The U.S. gold futures jumped 0.9 percent to $1,408.90 an ounce.