U.S. stock futures edged higher on Monday despite the Dow Jones Industrial Average enduring its third consecutive weekly decline, the worst streak since March. The S&P 500 and Nasdaq-100 futures advanced by 0.42% and 0.58% respectively, with Dow futures rising 0.36%. These modest gains followed escalations in Middle East tensions after Iran-backed Houthis launched missile and drone attacks on Saudi Arabia, prompting the U.S. State Department to urge Americans to reconsider travel plans to the region amid reciprocal threats between the U.S. and Iran.

Last week, the Dow fell 1.7%, marking its worst weekly performance in months, while the S&P 500 slipped about 0.1%, and the Nasdaq remained the lone gainer with a 0.7% increase. Asian markets reflected cautious optimism, with South Korea’s Kospi and Kosdaq rising along with Hong Kong’s Hang Seng and China’s CSI 300 indexes. Australia's benchmark and Japan’s markets (which were closed for a holiday) showed mixed results, signaling regional investor vigilance over geopolitical risks.

The Federal Reserve's recent interest rate hike, the first in three years, added to market jitters as the U.S. continues to battle inflation and the 10-year Treasury yield hovered near 5%. Meanwhile, oil prices remained elevated near $100 a barrel amid concerns about supply disruptions. JPMorgan analysts noted that Middle East oil flows stayed resilient despite pipeline attacks, maintaining an average of 17.1 million barrels daily, moderating some fears over potential energy shortages.

Investors also keenly anticipate an upcoming summit between President Donald Trump and Chinese President Xi Jinping, which will focus on tariff discussions, critical minerals, and emerging technologies such as artificial intelligence. Ahead of the meeting, Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng in an effort to ease economic tensions. Analysts highlight that geopolitical conflicts are driving energy costs and influencing central bank policies on inflation, underscoring the interconnected nature of global economic and political dynamics.