United States stock futures were little changed on Monday night (Tuesday AEDT) following a sharp relief rally on Wall Street, as investors assessed progress in the conflict between the United States and Iran.
By 9:30 am AEDT (10:30 pm GMT), futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 were trading within a narrow range of ±0.1%.
In Monday’s regular session, the Dow rose 1.4%, while the S&P 500 climbed 1.2% and the tech-heavy Nasdaq advanced 1.4%.
The rally was triggered after Trump said in a Truth Social post that the United States and Iran had held “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East”.
Westpac economist Ryan Wells noted: "Headlines have been very choppy since, with many Iranian officials denying that negotiations are taking place while President Trump effectively doubles down on the claim, leaving markets to strike a balance between welcoming the tentative news of possible de-escalation while weighing the immense uncertainty still clouding this progress.”
Oil markets also reflected easing tensions, with prices retreating sharply after recent spikes. West Texas Intermediate crude futures fell about 10.3% to settle at $88.13 per barrel, while Brent crude declined nearly 11% to $99.94 a barrel.
Analysts at ANZ noted: "Most analyses of the conflict’s economic implications have focused on its duration and the damage to energy infrastructure. An early cessation to fighting would be welcome, but even in that event it will take some time for global energy markets to normalise. Central banks will remain guarded amid still elevated uncertainty."
The geopolitical backdrop remains fragile. Over the weekend, Trump had threatened strikes on Iranian power plants if the Strait of Hormuz was not reopened. Iran responded by warning it would target U.S. infrastructure as retaliation if such action were taken.
Looking ahead, investors are turning their attention to upcoming economic data, with U.S. manufacturing figures due on Tuesday expected to provide further insight into the strength of the economy.
