United States equity futures were little changed on Monday night (Tuesday AEST), following a record-setting session on Wall Street that was fuelled by optimism surrounding a preliminary agreement between the United States and Iran to end the conflict in the Middle East.
By 10:20 am AEST (12:20 am GMT), Dow futures were broadly flat, while S&P 500 futures and Nasdaq 100 futures each slipped 0.1%.
The muted moves followed a rally during Monday's regular trading session, when the Dow Jones Industrial Average rose 0.9% to a fresh record close. The S&P 500 gained 1.7%, while the technology-heavy Nasdaq Composite surged 3.1%.
Investor sentiment improved after President Donald Trump announced that Washington and Tehran had reached an agreement aimed at ending the conflict.
Pakistan Prime Minister Shehbaz Sharif said both sides had agreed to cease military operations across all fronts, with a formal signing ceremony scheduled to take place in Switzerland on Friday.
Adding to confidence, a senior Trump administration official told CNBC's Megan Cassella that the memorandum of understanding had already been signed electronically on Sunday.
Markets also responded positively to news that the Strait of Hormuz, a critical global energy shipping route, is expected to reopen later this week.
Trump said the strategic waterway would reopen on Friday, helping drive oil prices nearly 5% lower during Monday's session as traders anticipated a restoration of energy flows through the region.
Vice President JD Vance reinforced those expectations during an appearance on CNBC's "Squawk Box" on Monday.
He said the strait would “be opened in a toll-free way for the long term”.
Lower oil prices helped ease inflation concerns and supported risk appetite across equity markets, particularly in growth-oriented technology stocks.
However, economists cautioned that significant uncertainties remain despite the diplomatic breakthrough.
Mantas Vanagas, Senior Economist at Westpac Group, noted:
"While it is an important diplomatic breakthrough that should remove a key source of market volatility, the durability of the deal is likely to be tested in the future. Importantly, many sticking points, including the fate of Iran’s nuclear programme, were left to be resolved in subsequent negotiations.
"Iran is also insisting that the agreement covers the war on all fronts, including Lebanon. Israel continued attacking Hezbollah targets there hours before the deal was reached, illustrating that curbing Israel’s determination to destroy Hezbollah completely may prove to be a tall order."
On Tuesday, market participants will closely monitor May housing starts data as well as export and import price indexes for fresh signals on economic activity, inflation pressures and the broader direction of the housing sector.