Wall Street futures drop as oil spikes after Trump rejects Iran peace proposal

On Monday, US stock index futures experienced a decline following President Donald Trump's rejection of an Iranian peace proposal. The proposal, relayed to the US through Qatari mediators at the UN General Assembly, suggested Iran's unwillingness to relinquish control over the Strait. Trump, however, indicated that US negotiators would continue talks this week, stating that Iran had overplayed its hand.

This led to a spike in crude prices, with crude jumping 4% to around US$108-a-barrel. The 60-day rolling correlation between oil prices and Wall Street futures has reached its highest level since late May, indicating a heightened sensitivity to macro factors such as the potential economic and inflationary impact of a prolonged conflict.

As a result, precious metal miners saw significant declines, with Gold Fields down 15.3%, Harmony Gold falling 8%, and Endeavour Silver losing 6%. Despite these challenges, the trade front saw some relief following the Sino-US summit, which resulted in a two-month extension of their trade truce. Traders are closely monitoring upcoming economic indicators, including the August Personal Consumption Expenditures Index and the September Non-Farm Payrolls report, as they await potential interest rate hikes by the Federal Reserve.