The conflict involving Iran is expected to remain a key focus for investors during a shortened trading week on Wall Street. U.S. President Donald Trump has suggested that discussions with Tehran have made progress, even as the fighting continues to expand across the Middle East. Oil prices remain far above the levels seen before the conflict began, heightening concerns about potential economic fallout. Still, the war is only one of several issues shaping markets as the first quarter draws to a close on Tuesday.
1. Iran conflict moves into its second month
Violence continued across the Middle East on Monday, with reports indicating that Iran launched projectiles toward Israel and several countries in the Persian Gulf.
The conflict has now entered its second month and has broadened further with the involvement of Iran-backed Houthi forces in Yemen. Israel’s military said it intercepted drone attacks launched from Yemen, adding to fears about disruptions to crude oil shipments while the critical Strait of Hormuz remains effectively closed.
At the same time, the Wall Street Journal reported that President Trump is considering a complicated and potentially risky military operation aimed at removing nearly 1,000 pounds of uranium from Iran.
In parallel, units from the U.S. 31st Marine Expeditionary Unit have reportedly arrived in the Middle East, a move seen as giving Trump additional military options as he weighs the next phase of the conflict. According to a Washington Post report, the Pentagon is preparing for the possibility of several weeks of ground operations in Iran.
Tehran has warned it would destroy any U.S. troops attempting to launch a ground invasion of the country.
At least 12 American service members were injured during Iranian attacks on an air base in Saudi Arabia over the weekend. Meanwhile, Iran-aligned Houthi rebels in Yemen also entered the conflict directly for the first time, launching strikes on Israel and intensifying fears about disruptions to key global energy routes.
If the Houthis were to target the Bab al-Mandab Strait, analysts at Vital Knowledge warned that the shipping crisis already triggered by the effective closure of the Strait of Hormuz off Iran’s southern coast could be “dramatically amplif[ied].” The Bab al-Mandab Strait is a major maritime chokepoint linking the Red Sea with the Gulf of Aden and the Indian Ocean.
2. Trump highlights progress in talks with Iran
Trump indicated that negotiations with Iran may be underway and suggested that a possible agreement could be approaching.
Speaking to journalists aboard Air Force One, Trump said discussions were going “extremely well,” adding that a deal with Iran was possible. He also referred to “regime change” in Tehran after recent U.S. strikes killed several senior Iranian officials over the past month.
“I think we’ll make a deal with them, but it’s possible we won’t,” the president said. When asked by a reporter, Trump added that “I do see a deal with Iran, could be soon,” although he did not provide a clear timetable.
Iran, however, has largely rejected claims that direct talks with Washington have taken place since the conflict began, insisting that hostilities must stop before negotiations can begin.
As has often been the case throughout the conflict, Trump’s remarks also included caveats. Alongside the Wall Street Journal report about a possible uranium extraction operation, the president told the Financial Times that he may seek to control Iran’s oil and could seize Kharg Island, a key Iranian export hub.
“Maybe we take Kharg Island, maybe we don’t. We have a lot of options,” Trump told the FT.
3. Brent oil remains above $100 per barrel
With Middle Eastern oil exports severely disrupted, Brent crude prices have climbed sharply—from around $70 per barrel before the conflict erupted in late February to more than $107 per barrel on Monday.
Given the importance of these supplies to the global economy, analysts have begun to worry about broader consequences across multiple industries. Food prices, for example, may rise as diesel fuel costs increase. Fertilizer availability has also tightened, partly because natural gas used in production is often sourced from the Middle East, raising costs for farmers.
Helium—an essential component in semiconductor manufacturing tied to the artificial intelligence boom—has also become harder to obtain. Aluminium, widely used in industries such as automotive and aerospace manufacturing, has faced similar supply shortages.
Concerns about the cascading impact of the Iran conflict have fueled predictions of rising global inflation, which could lead central banks to increase interest rates. Bond yields around the world have already moved higher, placing additional pressure on equity markets.
Nevertheless, markets do not appear to be “too concerned, yet, about fiscal and inflation risks,” according to Thomas Mathews, Head of Markets for Asia Pacific at Capital Economics.
However, Mathews wrote in a note that “[t]he war’s effects on markets may continue to elude an easy solve.”
4. First quarter of the year wraps up
While the joint U.S.-Israeli military campaign in Iran has been a major source of uncertainty, it has not been the only challenge investors have faced during the turbulent first quarter of 2026.
The January-to-March period, which concludes on Tuesday, also saw Trump threaten to take control of Greenland, a semiautonomous territory belonging to Denmark, a U.S. ally and NATO member. Earlier in the year, markets were also focused on the consequences of a dramatic U.S. attack on Venezuela that resulted in the capture of the country’s longtime leader and major oil producer, Nicolás Maduro.
Concerns surrounding artificial intelligence have also played a major role in shaping market sentiment, partly driven by rapid progress in new tools from companies such as Anthropic. Software-as-a-service companies were particularly affected by fears that AI tools could reduce demand for services like legal analysis and data processing. Some firms—including Jack Dorsey’s Block Inc—have even cited AI adoption as a factor behind large layoffs.
At the same time, the potential disruption AI poses to the software sector has raised warnings about increased default risks in direct lending, highlighting fragility in the once-booming private credit market.
5. U.S. jobs data ahead
Investors will also be watching economic data this week for clues about how the war in Iran may be affecting the broader U.S. economy.
A new reading on manufacturing activity for March from the Institute for Supply Management is scheduled for Wednesday. Analysts expect the index to decline slightly while remaining in expansion territory.
On Friday, the latest U.S. employment report will be released. Economists forecast that the U.S. economy added around 56,000 jobs in March, rebounding from a decline of 92,000 in February. The unemployment rate is expected to remain steady at 4.4%.
The nonfarm payrolls report will likely attract particularly close attention, as it could influence how Federal Reserve officials approach interest rate policy in the coming months.
“In terms of the U.S. data this week, the focus will be on the labor market,” analysts at ING wrote in a research note. “Friday’s NFP release, […] should leave the market minded to price [Fed] tightening this year in response to the energy shock. Any surprise weakness could hit the dollar.”