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Dow Jones futures slip as geopolitical tensions fuel risk aversion

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Dow Jones futures slip as geopolitical tensions fuel risk aversion

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New update 2025.09.22 17:15
Dow Jones futures slip as geopolitical tensions fuel risk aversion

update 2025.09.22 17:15

  • Dow Jones futures decline amid rising geopolitical tensions in Europe and the Middle East.
  • Poland's NATO-aligned armed forces deployed aircraft to ensure the safety of Polish airspace after Russian airstrikes.
  • US indices reached record highs due to the potential for two further rate cuts by the Fed this year.

Dow Jones futures edge down 0.38%, with trading below 46,500 during European hours on Monday, ahead of the United States (US) regular opening. Moreover, the S&P 500 futures decline 0.38% to trade around 6,700, while Nasdaq 100 futures fall 0.42% to trade near 24,750.

US index futures lose ground on increased risk aversion amid worsening geopolitical tensions after Russia launched airstrikes targeting western Ukraine near the border with Poland. In response, Poland's NATO-aligned armed forces deployed aircraft on Saturday to ensure the safety of Polish airspace. Three Russian military jets also violated NATO Estonia's airspace on Friday, while Germany's air force reported that a Russian military plane entered neutral airspace on Sunday over the Baltic Sea.

Britain, Canada, Australia, and Portugal recognized the Palestinian state on Sunday, aiming at advancing a two-state solution. They join over 140 nations supporting Palestinians' bid for an independent homeland from the occupied territories. The decision could spark a furious response from Israel, as these Western countries had long been considered close allies, per Reuters.

On Friday's regular session, all three indices reached fresh record highs, with the Dow Jones edged up 1.05%, the S&P 500 advanced 1.22% and the Nasdaq Composite climbed 2.21%. The gains came after the US Federal Reserve (Fed) delivered a widely expected quarter-point rate cut, its first since December, while signaling two more cuts this year.

Traders await the upcoming Fed commentary and Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, which is expected to signal subdued price pressures.

Dow Jones FAQs

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow's theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.


Date

Created

 : 2025.09.22

Update

Last updated

 : 2025.09.22

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