U.S. stock futures edged lower on Tuesday as investors grew cautious amid escalating hostilities between Israel and Iran. While hopes for a ceasefire remain alive, behind-the-scenes talks reportedly continue, including possible discussions between American officials and Tehran. Meanwhile, President Donald Trump left the G7 summit in Canada earlier than expected, dismissing speculation that his departure was connected to ceasefire negotiations. Economic focus turns to the upcoming release of U.S. retail sales data later in the day, while the Bank of Japan unveiled plans to slow its tapering of monthly bond purchases starting next fiscal year.
Futures Dip Amid Rising Geopolitical Concerns
By early Tuesday, Dow futures dropped about 330 points, roughly 0.8%, with S&P 500 futures down 0.7% and Nasdaq 100 futures off by 157 points, or 0.7%. This pullback followed gains on Monday when some analysts noted a slight easing in concerns after the recent Israel-Iran airstrike exchanges.
President Trump’s remarks at the G7 meeting brought cautious optimism regarding new trade agreements, particularly with Canada. Despite ongoing tariff disputes, talks are progressing toward a refreshed economic and security pact expected within a month. Trump also inked a trade deal with the UK aimed at reducing certain import tariffs, although tariffs on steel and aluminum remain contentious.
Middle East Conflict Intensifies
Israeli forces announced a series of heavy strikes on Iranian military sites, targeting missile storage and launch locations in western Iran. Israeli military sources claimed that a senior Iranian general was killed in Tehran overnight, though Iran has not confirmed the incident. Reports suggest U.S. diplomats are quietly exploring the possibility of restarting nuclear talks with Iran, involving emissaries from both sides as part of efforts to lower tensions. However, Iran reportedly insists Israel halt its airstrikes before engaging in negotiations.
President Trump has taken a hard line, urging civilians in Tehran to evacuate and insisting Iran must cease uranium enrichment, despite Iran’s assurances it is not pursuing nuclear weapons.
Oil and Gold Hold Steady
Amid the unrest, oil prices inched higher while gold remained steady, maintaining its role as a haven asset amid geopolitical uncertainty.
Trump’s Unexpected Early Departure from G7
Trump exited the G7 summit earlier than planned, denying that his early leave was related to ceasefire discussions, instead referring to “something much bigger.” Before his departure, G7 leaders called for de-escalation in the Middle East while reiterating their support for Israel and condemning Iran as a destabilizing force.
Eyes on US Retail Sales Data
Market attention is now fixed on the upcoming May retail sales report. Economists forecast a 0.5% drop month-over-month, following a modest 0.1% rise in April. Despite tariff worries, consumer sentiment in the U.S. improved in June—the first increase in six months—fueled partly by hopes for easing trade tensions with China. Yet, the fragile optimism faces risks from mounting geopolitical instability and potential surges in oil prices.
Bank of Japan Eases Bond Purchase Tapering
As expected, the Bank of Japan held its benchmark interest rate steady at 0.5%. It also announced plans to slow the pace of tapering its monthly bond purchases starting April 2026, cutting the reduction rate from 400 billion yen to 200 billion yen per quarter. This measured approach seeks to maintain economic support while limiting market shocks amid challenges posed by U.S. trade tariffs.
The BOJ’s announcement precedes a busy week of central bank decisions, including the U.S. Federal Reserve’s policy update scheduled for Wednesday.