Futures slip after strong rally as Iran tensions rise

(Reuters) – U.S. stock index futures dipped on Friday, after a strong rally in the prior session that helped the S&P 500 hit a record high, as rising tensions between the United States and Iran kept investors on edge.

FILE PHOTO: Traders work on the main trading floor after the opening bell at New York Stock Exchange (NYSE) in New York, U.S. June 20, 2019. REUTERS/Brendan McDermid/File Photo

Tehran had received a message from President Donald Trump, delivered through Oman overnight, warning that a U.S. attack was imminent but adding he was against war and wanted talks, Iranian officials told Reuters on Friday.

They spoke shortly after the New York Times reported that Trump had approved military strikes against Iran in retaliation for the downing of a U.S. surveillance drone but called off the attacks at the last minute.

The benchmark S&P 500 index closed at a new record of 2,954.18 on Thursday after the Federal Reserve signaled interest rate cuts beginning as early as next month.

Money markets are pricing in three Fed rate cuts before year-end and are tipping as many as five cuts through mid-2020. [FEDWATCH]

Investors will now look to a G20 summit in Japan next week for signs of progress on talks between the United States and China to resolve their differences that had sparked the benchmark index’s worst monthly performance this year in May.

Oil prices rallied about 1% on fears that a U.S. military attack on Iran that would disrupt flows from the Middle East, which provides more than 20% of the world’s oil output. [O/R]

At 6:35 a.m. ET, Dow e-minis were down 39 points, or 0.15%. S&P 500 e-minis were down 6.5 points, or 0.22%, and Nasdaq 100 e-minis were down 24 points, or 0.31 %.

Chipmakers took a beating in premarket trading after Britain’s IQE Plc became the latest semiconductor company to warn on full-year revenue, citing the impact of the Huawei ban.

Shares of Intel Corp, Micron Technology and Advanced Micro Devices fell between 0.4% and 1.3%.

Among other stocks, Facebook Inc fell 0.6% after Bank of England Governor Mark Carney said major central banks and regulators will want oversight of the social media company’s proposed new currency and payment system Libra.

Slack Technologies Inc gained 4%, a day after the workplace messaging platform soared nearly 50% in market debut.

On the macro front, Markit manufacturing sector flash PMI data, due at 09:45 a.m. ET, is expected to show a reading 50.4 in June up from 50, a month earlier.

The PMI reading comes after data from Germany, France and euro zone came in slightly higher in June compared to May.

Reporting by Amy Caren Daniel in Bengaluru; Editing by Sriraj Kalluvila

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