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

US stock index futures fell on Monday after President Donald Trump rejected an Iranian peace proposal, causing crude prices to surge and reigniting inflation concerns. Iran proposed peace at the UN General Assembly, relayed to the US through Qatari mediators. Trump stated on Saturday that he had rejected the offer, but later said on Sunday that he expects US negotiators to continue talks that week.

Mohit Kumar, an economist at Jefferies, noted that Iran's overplay of its hand suggests the main issues of contention remain Iran's control of the Strait and the ongoing nuclear program. Crude prices surged 4% to about US$108-a-barrel, and the 60-day correlation between oil prices and Wall Street futures reached its highest level since late May, indicating heightened sensitivity to macro factors, such as the potential economic and inflationary effects of a protracted conflict.

Some precious metal miners suffered significant declines as high yields pressured their non-yielding assets. Dow E-minis slipped 0.48%, S&P 500 E-minis fell 0.45%, and Nasdaq 100 E-minis declined 0.86%.