U.S. equity futures ticked modestly higher on Tuesday, while oil prices retreated, as investors responded to signs of possible progress in efforts to bring the Iran conflict to a lasting end. However, a U.S. blockade of Iranian ports has now entered its second day, further disrupting crude shipments through the critical Strait of Hormuz. Meanwhile, a wave of major U.S. bank earnings is set to dominate market attention, while LVMH (EU:MC) highlighted a hit to sales from the Middle East tensions.
Futures Move Higher
U.S. stock futures showed slight gains, supported by optimism surrounding ongoing negotiations between Washington and Tehran aimed at securing a permanent ceasefire. Investors are also bracing for a busy earnings session led by major financial institutions.
As of 03:17 ET, Dow futures rose by 51 points, or 0.1%, S&P 500 futures added 10 points, or 0.1%, and Nasdaq 100 futures climbed 72 points, or 0.3%.
Wall Street’s main indices had closed higher in the previous session, as initial disappointment over the lack of an immediate breakthrough in weekend talks between the U.S. and Iran began to fade. U.S. President Donald Trump said the White House had been contacted by Iranian officials and that he wants to “make a deal,” adding that Iran will not obtain a nuclear weapon.
“[W]hile the meeting was certainly disappointing, it was hardly catastrophic, and if one looks closely, Trump seems to be pivoting aggressively away from kinetic escalation,” analysts at Vital Knowledge wrote in a note.
They added that their overall view of the conflict remains “relatively sanguine,” although the “economic fallout from what’s already occurred” could prove “significant.”
U.S. Port Blockade Extends
At the same time, the U.S. blockade of Iranian ports, introduced on Monday, is adding further pressure to oil flows already constrained through the Strait of Hormuz.
Tehran has condemned the move as an “act of piracy,” with reports indicating that roughly 15 U.S. warships are involved. British maritime authorities said access has been restricted for vessels entering or leaving Iranian ports, as well as in coastal waters across the Persian Gulf, Gulf of Oman, and parts of the Arabian Sea.
Despite these tensions, diplomatic channels appear to be making headway. According to Reuters, the U.S. and Iran remain engaged, with some progress toward a permanent ceasefire agreement.
Pakistan, which has emerged as a key intermediary, has offered to host a second round of talks ahead of the expiration of the current two-week truce. The initial meeting took place in Islamabad over the weekend.
Elsewhere, Israel and Lebanon are set to begin direct peace talks in Washington, although ongoing Israeli strikes against Iran-aligned Hezbollah targets in Lebanon remain a key source of tension.
Oil Slips Below $100
Expectations that diplomacy could lead to easing tensions—and potentially restore smoother shipping through the Strait of Hormuz—have pushed oil prices lower, with both major benchmarks falling below $100 per barrel.
Brent crude declined 1.5% to $97.88 a barrel, while U.S. West Texas Intermediate dropped 3.4% to $95.78 a barrel.
Even so, the outlook remains uncertain. In its first assessment of the Iran conflict’s impact released Monday, OPEC cut its forecast for global oil demand in the second quarter by 500,000 barrels per day.
However, the reduction was less severe than some projections, and OPEC left its full-year outlook unchanged, suggesting expectations for a rebound in consumption later in 2026.
Bank Earnings in Focus
Market attention is now turning to the earnings calendar, with several major U.S. banks set to report results.
JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) are due to release quarterly figures ahead of the market open, followed by Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) on Wednesday.
Analysts expect results to be supported by strong trading activity and investment banking revenues, even as uncertainty linked to the Iran conflict lingers. Earlier this month, Jamie Dimon warned that the conflict could trigger commodity price shocks, keeping inflation elevated and pushing interest rates higher than current expectations.
On Monday, Goldman Sachs (NYSE:GS) reported a 19% rise in first-quarter profit, driven by robust performance across its trading and investment banking divisions.
LVMH Flags Sales Impact
In Europe, shares of LVMH (EU:MC) fell in early trading after the company said the Middle East conflict had reduced group sales by at least 1%, weighing on expectations for a continued recovery in the luxury sector.
The group, which owns brands such as Louis Vuitton and Bulgari, reported quarterly sales growth of 1%, missing forecasts for a 1.5% increase, according to Visible Alpha estimates cited by Reuters.
Chief Financial Officer Cécile Cabanis said that “[w]hat we see today is still that demand is very much down” following disruptions to shopping activity in the Middle East since the outbreak of the Iran conflict.
Rival Kering (EU:KER), owner of Gucci, is scheduled to report results after the close of European markets later in the day.
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