US futures climb as oil prices drop, investors await expected Trump-Xi meeting

HONG KONG: US futures are climbing as oil prices decline and investors await an expected meeting between US President Donald Trump and Chinese leader Xi Jinping this week in Washington, which could cover trade, artificial intelligence and geopolitics.

Futures for the S&P 500 gained 0.7 per cent on Monday, while those for the Dow Jones Industrial Average rose 0.8 per cent. Nasdaq futures climbed 1.1 per cent.

Oil prices fell more than 3 per cent Monday as vessel traffic and energy flows through the Strait of Hormuz picked up, although the Strait has remained largely closed and uncertainty persisted over US-Iran tensions. Saudi Arabia on Saturday confirmed that Yemen's Houthi rebels tried to attack its capital with a ballistic missile, the first targeting of Riyadh since the escalation in fighting with the Tehran-backed rebels that has opened a new front in the Iran war.

Brent crude, the international standard, fell 3.2 per cent to USD 100.50 per barrel. It was at roughly USD 72 a barrel in late February, before the start of the war in Iran. Oil prices shot past USD 100 a barrel earlier in the month. It was the first time prices had reached triple digits since July.

Benchmark US crude lost 3.2 per cent to USD 92.98 per barrel.

Oil supply concerns remain elevated, ING commodities strategists Ewa Manthey and Warren Patterson wrote in a commentary on Monday. However, they said profit-taking by investors after the recent jump in oil prices, together with hopes for constructive discussions at this week's UN General Assembly and at the Trump-Xi meeting, helped improve market sentiment.

Treasury Secretary Scott Bessent told reporters following talks Sunday with Chinese Vice Premier He Lifeng in New York that the US had “a very successful engagement” with the Chinese side.

Bessent said talks with China touched on trade and AI. China and the United States have been discussing reciprocal tariff reductions on USD 30 billion worth of goods from each side.

In Beijing, China's Foreign Ministry on Monday confirmed that Xi will pay a state visit to the US between September 23 and 25. Experts and policymakers believe trade, tariffs, AI safety, among other items, are likely to be on the agenda. The war in Iran and developments in the Middle East and ties between China and Iran could also be discussed.

Investors are also watching the bond market as the yield on the US 10-year Treasury hit 5 per cent and the Federal Reserve last week decided to raise rates for the first time in three years. The yield on the US 10-year Treasury was at around 4.96 per cent on Monday. The Bank of Japan last week also raised rates to a 31-year high.

Government bond yields have been elevated since the war also because of growing inflationary pressure from the war-driven energy shock as well as concerns about rising US national debt.

In Europe, Britain's FTSE 100 added 1 per cent to 10,761.35. France's CAC 40 rose 1 per cent to 8,142.14. Germany's DAX was up 1.1 per cent to 25,591.79.

Markets in Japan were closed Monday and will remain closed through Wednesday for holidays.

The US dollar rose to 157.27 Japanese yen from 156.81 yen. The euro was trading at USD 1.1481, down from USD 1.1483.