Wall Street futures traded higher on Thursday as investors weighed a more aggressive Federal Reserve outlook against easing geopolitical tensions following a newly signed peace agreement between the United States and Iran.
The rebound came after a difficult session for U.S. equities, where concerns over future interest rate increases overshadowed optimism surrounding developments in the Middle East.
Dow futures rose 0.6%, while S&P 500 and Nasdaq 100 futures gained 0.8% and 1.4%, respectively.
Fed Signals Inflation Fight Is Not Over
Markets came under pressure on Wednesday after the Federal Reserve left borrowing costs unchanged but indicated that additional tightening remains a possibility.
The central bank’s latest projections showed a growing number of policymakers expecting at least one rate increase before year-end, highlighting concerns that inflation could remain stubbornly elevated.
Federal Reserve Chair Kevin Warsh also outlined plans for a broad review of the institution’s operations, including inflation measurement, labour market analysis and communication practices.
A noticeably shorter policy statement accompanied the decision and placed particular emphasis on the Fed’s commitment to “deliver price stability.”
Investors interpreted the revised language as evidence that inflation control has become the dominant priority for policymakers.
Stephen Brown, Chief North America Economist at Capital Economics, said the central bank has left the possibility of a “hike as soon as September” firmly on the table.
Peace Accord Between U.S. and Iran Lifts Sentiment
Countering some of the concerns around monetary policy was news that Washington and Tehran had signed an agreement aimed at ending a conflict that has disrupted global energy markets for months.
The accord is expected to pave the way for the reopening of the Strait of Hormuz and a gradual return of Iranian oil exports, subject to the removal of U.S. sanctions.
President Donald Trump signed the agreement in Versailles on Wednesday and reportedly said he wanted to prevent an “economic catastrophe” stemming from prolonged instability.
Iranian President Masoud Pezeshkian also signed the accord, according to state media reports.
Although discussions surrounding Iran’s nuclear programme remain unresolved, markets viewed the development as a positive step toward reducing geopolitical risk.
Oil Prices Retreat Further
Crude prices continued to decline as traders anticipated the eventual return of Iranian supply to international markets.
Brent crude fell 2% to $77.97 per barrel, while West Texas Intermediate dropped 2.1% to $75.15.
Despite the recent weakness, analysts cautioned that prices could remain above pre-conflict levels as logistical and regulatory challenges may slow the restoration of normal export flows.
“Iran expects a swift lifting of U.S. oil sanctions, supporting a return of exports. However, uncertainty remains about how quickly flows can normalize, with ramp-up timelines dependent on operational, logistical and sanction-related adjustments,” analysts at ING said.
Apple Warns on Rising Costs
Apple (NASDAQ:AAPL) was also in focus after reports suggested the technology giant is preparing to increase prices across parts of its product range.
“Unfortunately, price increases are unavoidable,” CEO Tim Cook told The Wall Street Journal.
Cook cited rising component costs as a growing challenge for the company.
“We’re doing our best to mitigate the huge increases that are being passed to us […] but the situation has become unsustainable,” he said.
According to the report, Mac computers and iPads are likely to be among the first products affected by the planned pricing changes.
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