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U.S. equity futures moved lower in early Tuesday trading, following along from a pullback in overseas markets, as central bank officials pushed back on calls for spring interest-rate cuts and investors adopted a defensive stance linked to escalating tensions in the Gulf region.

Hawkish comments from two key European Central Bank officials at the World Economic Forum in Davos, Switzerland, helped push stocks in the region to their lowest levels since mid-December, while clipping gains for the European single currency against the U.S. dollar. 

A series of weekend attacks by Iran-backed Houthi rebels on ships in the Red Sea, including a U.S.-owned cargo vessel, have added to concerns that tensions could spill over into a wider regional conflict.

Brent crude futures prices, the global benchmark, were hovering near the $80 per barrel mark in overnight trading following news of the attack on the M/V Gibraltar Eagle, a U.S.-owned container ship, as well as reports of missile strikes by Iran on targets in Iraq and Syria.

Collectively, the hawkish tilt in Europe and safe-haven flows elsewhere have lifted the U.S. dollar index, which tracks the greenback against a basket of six global currencies, by around 0.8% to a one-month high of 103.276 in overnight dealing.

Benchmark 10-year-note yields, meanwhile, were marked around 5 basis points higher from Friday’s closing levels at 4.009%, with 2-year notes trading at 4.213%.

All that said, traders are still pricing in a 67% chance that the U.S. Federal Reserve will cut interest rates in March, up from 48.7% this time last week, with the odds of a follow-on move in May pegged at 100%.

Federal Reserve Governor Christopher Waller will speak later today at the Brookings Institute in Washington, with investors likely focusing on whether he’ll challenge those improved rate-cut forecasts. 

On Wall Street, investors will also parse the next run of fourth-quarter earnings, with updates expected from Goldman Sachs Group  (GS) – Get Free Report and Morgan Stanley  (MS) – Get Free Report prior to the opening bell. 

Collectively, fourth-quarter S&P 500 profits are expected to rise around 4.4% from the same period in 2022, to a share-weighted $467.1 billion, before rising 7% over the first three months of this year. 

Still, stocks are looking at a weaker open Tuesday with futures contracts tied to the S&P indicating a 21 point decline and those linked to the Dow Jones Industrial Average priced for a 121 point pullback.

The tech-focused Nasdaq, meanwhile, is set for a 90 point opening-bell decline thanks in part to premarket declines for Apple  (AAPL) – Get Free Report and Tesla  (TSLA) – Get Free Report.

In overseas markets, Europe’s Stoxx 600 was marked 0.61% lower in early Frankfurt trading as traders focused on the hawkish tenor of ECB officials and bypassed a stronger-than-expected reading of German investor sentiment from the closely tracked ZEW Institute. 

Overnight in Asia, stocks were also firmly in the red, with the regionwide MSCI ex-Japan benchmark falling 1.63% and the Nikkei 225 ending 0.79% lower in Tokyo.

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