STOCK MARKETS TODAY: Markets Brace for Iran Attack as Israel Considers Response

U.S. stock futures were higher Monday, oil prices slipped, and the U.S. dollar retraced its recent gains against global currencies, as investors focused on Israel's formal response to the unprecedented missile attack by Iran over the weekend.

The U.S. dollar surged to a five-month high against global currencies on Sunday, as investors scrambled to buy safe-haven assets in preparation for a week of heightened market volatility amid fears that the attacks in Tehran could spark a wider military conflict in the Middle East.

Iran said the attack was Iran's first-ever military action directly targeting Israeli sovereign territory, and was in retaliation for an Israeli attack on April 1 on a consulate building on the grounds of the Iranian Embassy in Syria, which it said killed several senior officials of Iran's Islamic Revolutionary Guard Corps.

Israel did not claim responsibility for the Damascus incident but vowed to "make Iran pay when the time is ripe ...... ," saying it had repelled about 99% of the 300 drones and missiles fired by Tehran on Saturday night.

Global oil prices have risen more than 30% since the Israeli-Hamas war broke out in early October, and will come into focus this week after Iran launches its first attack on Israeli sovereign territory.

TIMOTHY A. CLARY/AFP via Getty Images

"We will create a regional alliance that will make Iran pay in a way and at a time that suits us," said Benny Gantz, a retired army general who serves in the Cabinet of Ministers of Agriculture of Benjamin Netanya.

Meanwhile, Iran has said it will strike back if the U.S. or Israel retaliate.

"The presidential stance is very clear: We don't want to escalate regional tensions. We're not looking for a broader breach," White House national security spokesman John Kirby said Sunday on ABC's "This Week."" I think the hours and days ahead will tell us a lot.

To the extent possible, the prospect of the killing and capture of 1,200 Israeli citizens by Iranian-backed Hamas across the border from Gaza on October 7 is likely to rock global financial markets after a week of sharp volatility brought on by the expected repricing of the Fed's interest rate cut.

The S&P 500 closed down 75 points, or 1.46%, its biggest one-day drop since the end of January, and down about 1.55% for the week.

Investors also have a busy corporate earnings week ahead of them, with 41 S&P 500 companies reporting over the next five days, as well as important data such as retail sales, housing starts and weekly jobless claims data.

Analysts believe first-quarter earnings will grow 2.7% from a year ago to $447.3 billion, and second-quarter profit is expected to rise to $494.7 billion.

The U.S. Department of Commerce will also release March retail sales data at 8:30 a.m. ET, and economists expect a slight slowdown from the $700.7 billion figure.

Early indications are that the market is now expecting a solid start to Monday's session, with futures on the S&P 500 showing a 22-point gain and futures on the Dow Jones Industrial Average showing a 190-point gain.

Meanwhile, the tech-focused Nasdaq Resonance Index (NRI), which is the world's largest and most popular index, has been on a tear. ) It's going to go up 113 points, as much as Tesla (TSLA ) and Apple (AAPL) Down in front of Granite.

The U.S. dollar index, which tracks the greenback against a basket of six major currencies, was down 0.15% at 105.876 points. Over the weekend, the dollar index hit its highest point since Nov. 2, suggesting that investors are preparing for risk aversion this week as geopolitical tensions continue to heat up.

Gold, another safe-haven asset, rose 1.21 TP3T in Sunday trading, changing hands at $2,371.73 an ounce.

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The CBOE's VIX index, the market's main volatility gauge, surged 14.55% in after-hours trading to a late-October high of $17.08, a sign that traders expect the S&P 500 to move about 54 points, or 1.07%, a day for the next month. That suggests traders expect the S&P 500 to move about 54 points a day, or 1.07%, over the next month.

"The classic defensive strategy has taken hold as investors reduce their exposure and risk ahead of the weekend, with the potential for a huge jump in risk at the market open on Sunday," said Michael Brown, senior research strategist at Pepperstone, based in London. The classic defensive strategy has worked because of the risk of a huge jump when the market opens on Sunday.

Iran detained an Israeli cargo ship, MSC Aries, near the Strait of Hormuz on Saturday. The Aries is flying the Portuguese flag and belongs to the Zodiac shipping group owned by Israeli billionaire Eyal Ofer.

Global oil prices closed at $90.45 a barrel on Friday, extending a five-month gain to about 32%, and were slightly lower in the morning, with June delivery Lombard down 52 cents to $89.93 a barrel.

WTI futures for May delivery, which are closely tied to U.S. domestic gasoline prices, fell 71 cents to $85.09 a barrel.

"Crude prices already contain a risk premium, and unless the market faces a real supply disruption, the risk of an upside surge to $100 remains limited," Saxo Bank strategists wrote on Monday." All eyes are on Israel and their reaction."

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