US pre-open: Stocks set to dip as tensions worsen in Persian Gulf

Wall Street futures were pointing to losses at the open as tensions between Washington and Tehran continued to build.

As of 1200 BST, Dow futures had the index opening 0.11% lower at 26,733, while the S&P 500 and the Nasdaq Composite were on track to start the session 0.16% and 0.26% weaker, respectively.

The Dow closed just 8.4 points higher on Monday after finishing slightly lower at the end of the previous week, despite a flurry of 'dovish' remarks from top US central bank officials.

While a lot of Tuesday's focus will likely be on the US central bank, with five key Fed policymakers, including chairman Jerome Powell, set to speak.

Investor sentiment was cautious on the back of an executive order signed by Donald Trump slapping Iran's supreme leader and eight Iranian Revolutionary Guard commanders with "hard-hitting" new sanctions in response to the downing of an unmanned US drone last week.

In response, Tehran said the latest moves by Washington meant the "permanent closure" of diplomatic channels between the two countries, labelling them "outrageous and idiotic".

Investors were also eagerly anticipating a meeting between Trump and Chinese President Xi Jinping for later in the week - the first face-to-face meeting between the pair since trade talks broke down in May, which had led to a tit-for-tariffs battle between the two superpowers.

Discussing the session ahead, SpreadEx analyst Connor Campbell said: "Just like on Monday, there is little to distract the markets from a geopolitical broth that's reaching boiling point, meaning the subdued trading could be the default for the rest of Tuesday."

In addition to the Fed speak, there was also a deluge of economic data scheduled for Tuesday, with the S&P CoreLogic Case-Shiller National Home Price Index for April scheduled for shortly after the bell at 1400 BST, while new home sales data for May would follow at 1500 BST, alongside a reading on consumer confidence and the latest survey data from the Richmond Fed.

On the corporate front, FactSet and Lennar will both report earnings before the opening bell, with the likes of FedEx and Micron scheduled to release their latest quarterly results after the close.