U.S. equity futures moved higher on Tuesday as investors approached the final trading session of the first quarter, helped by reports suggesting that President Donald Trump may be considering ending the military campaign against Iran even if the Strait of Hormuz remains largely blocked. Energy markets, however, remained tense after a Kuwaiti oil tanker caught fire near Dubai following what its owner described as an Iranian strike. Traders are also looking ahead to fresh U.S. labor market data and new inflation figures from the Eurozone.
U.S. futures point higher
U.S. stock futures were trading in positive territory early Tuesday as the conflict involving Iran continued to shape global market sentiment.
At 03:29 ET, Dow futures were up 333 points, or 0.7%, S&P 500 futures had added 42 points, or 0.7%, and Nasdaq 100 futures rose 137 points, or 0.6%.
Monday’s trading session on Wall Street ended unevenly. The S&P 500 and Nasdaq Composite both finished lower, while the Dow Jones Industrial Average managed a small gain.
Earlier optimism had lifted equities after President Trump wrote on social media that negotiations with Iran were making “great progress.” At the same time, he reiterated that the United States could strike Iranian power plants and other key infrastructure if talks fail to reopen the Strait of Hormuz.
“While Trump and the White House are trying to put a very positive spin on the state of negotiations, investors are paying much more attention to actual developments in the war,” analysts at Vital Knowledge said in a note to clients.
Fighting in the Middle East has intensified in recent days, with continued air strikes and the involvement of Iran-aligned Houthi forces in Yemen. The widening conflict has heightened concerns over potential disruptions to global oil shipping routes. Tehran has also rejected Washington’s claims about progress in talks and largely dismissed a 15-point U.S. peace proposal.
Trump reportedly considering ending Iran campaign without reopening Hormuz
According to a report by the Wall Street Journal, Trump has told advisers he could wrap up the military campaign against Iran even if the Strait of Hormuz remains mostly closed.
Officials cited by the newspaper said attempts to fully reopen the waterway would likely extend the conflict beyond the four-to-six-week timeframe initially envisioned by the administration. Instead, Washington may aim to scale down hostilities after achieving major objectives such as weakening Iran’s naval forces and limiting its missile arsenal.
The U.S. would then attempt to persuade Iran diplomatically to restore access to the strait. If that approach fails, Washington may encourage European and Gulf allies to take the lead in reopening the key shipping route.
The Strait of Hormuz has become a focal point of the U.S.-Israel confrontation with Iran. Tehran has effectively obstructed the channel using naval mines and missile strikes. The passage is critical to global energy markets, carrying roughly 20% of the world’s oil consumption.
Oil holds above $110
Disruptions to traffic through the strait have triggered a sharp rise in global energy prices over the past several weeks.
Brent crude, the global benchmark, has surged above $110 per barrel, compared with around $70 before the conflict began. On Tuesday, May Brent futures were up 0.5% at $113.39 per barrel.
Adding further pressure to prices, a Kuwaiti tanker caught fire near Dubai after what the vessel’s owner said was an Iranian attack. Since the conflict began in late February, Iran has targeted energy facilities across the Persian Gulf, raising fears of supply disruptions affecting countries in both Asia and Europe.
Meanwhile, Iran’s parliament has reportedly approved an early proposal to impose a toll on ships transiting the Strait of Hormuz, according to the semi-official Fars news agency.
“A toll or selective access through Hormuz would keep a persistent risk premium in oil, as flows could be curtailed at short notice, while higher insurance and freight costs lift delivery prices even without a full shutdown,” analysts at ING said in a note.
JOLTS report in focus
On the economic calendar, markets will be watching the latest Job Openings and Labor Turnover Survey (JOLTS) from the United States, widely viewed as a gauge of labor demand.
Economists expect the report to show 6.89 million job openings in February, slightly lower than 6.946 million in January.
Although the data largely covers a period before the escalation of tensions in the Middle East, it remains an important measure of labor market strength before the geopolitical shock. The report will also serve as a lead-in to Friday’s more comprehensive March nonfarm payrolls report.
Officials at the Federal Reserve will closely monitor the employment data, particularly as inflation pressures begin to build. Employment and inflation remain the two key pillars guiding the Fed’s policy decisions.
Eurozone inflation data ahead
Investors are also awaiting Eurozone inflation figures for March, which could provide further insight into the economic consequences of the Middle East conflict.
Europe relies heavily on natural gas imports from Gulf countries, especially Qatar, where production facilities have reportedly been targeted by Iranian air strikes.
Officials at the European Central Bank (ECB) have indicated that rate hikes could be considered if higher energy costs revive inflation across the currency bloc. ECB President Christine Lagarde has said policymakers may still need to act even if price pressures prove temporary.
Economists expect headline inflation to reach 2.6% in March, up from 1.9% in February. The ECB’s medium-term inflation target remains 2.0%.
Expectations of a possible ECB rate increase have pushed European government bond yields higher in recent sessions, although they were largely stable ahead of Tuesday’s inflation release. Bond yields typically move in the opposite direction to bond prices.
