U.S. equity futures moved higher on Tuesday as investors looked ahead to the final trading day of the first quarter, supported by reports that U.S. President Donald Trump may be considering ending the military campaign in Iran even if the Strait of Hormuz remains closed. Energy markets, however, stayed under pressure after a Kuwaiti oil tanker caught fire near Dubai following what was described as an Iranian attack. Investors are also watching upcoming U.S. job openings data and fresh inflation figures from the Eurozone.
U.S. futures advance
U.S. stock futures climbed early Tuesday as the conflict involving Iran continued to influence global markets.
As of 03:29 ET, Dow futures were up 333 points, or 0.7%, S&P 500 futures gained 42 points, or 0.7%, and Nasdaq 100 futures rose 137 points, or 0.6%.
Wall Street ended Monday’s session with mixed results. The S&P 500 and Nasdaq Composite both closed lower, while the Dow Jones Industrial Average posted a modest gain.
Earlier in the session, equities had rallied after President Trump said on social media that negotiations with Iran were making “great progress.” At the same time, he warned that the U.S. could target power plants and other critical infrastructure in Iran 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 wrote in a note to clients.
The conflict has continued to escalate across the Middle East, with air strikes exchanged between opposing sides and Iran-aligned Houthi forces in Yemen becoming increasingly involved. This expansion of the conflict has intensified fears about disruptions to vital oil shipping routes. Meanwhile, Tehran has rejected U.S. statements regarding negotiations and largely dismissed a proposed 15-point peace plan from Washington.
Trump reportedly open to ending Iran campaign without reopening Hormuz
According to a report from the Wall Street Journal, Trump has told advisers that he would consider ending the military operation against Iran even if the Strait of Hormuz remains mostly closed.
Officials told the newspaper that attempts to fully reopen the strait could extend the conflict beyond the four-to-six-week timeframe the president had initially envisioned. Instead, Washington may seek to wind down the fighting after achieving key objectives such as weakening Iran’s naval capabilities and reducing its missile arsenal.
The U.S. would then try to pressure Iran through diplomatic channels to reopen the waterway. If those efforts fail, Washington could push European and Gulf allies to take a more active role in restoring access to the strait.
The Strait of Hormuz has become a central flashpoint in the U.S.-Israel conflict with Iran. Tehran has effectively blocked the passage using naval mines and missile strikes. The route is crucial for global energy supply, accounting for roughly 20% of worldwide oil consumption.
Oil prices remain above $110
The disruption to shipping through Hormuz has driven a sharp surge in global energy prices in recent weeks.
Brent crude, the global benchmark, has climbed above $110 per barrel, compared with levels near $70 before the conflict began. On Tuesday, May Brent futures rose 0.5% to $113.39 per barrel.
Adding to the upward pressure on prices, a Kuwaiti oil tanker caught fire near Dubai after what its owner described as an Iranian attack. Since the conflict erupted in late February, Iran has targeted energy infrastructure across the Persian Gulf, raising concerns about supply disruptions for several countries in Asia and Europe that rely heavily on these resources.
Meanwhile, Iran’s parliament has approved an initial plan to impose a toll on ships passing through 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 job openings data ahead
On the economic calendar, markets will be watching the latest U.S. Job Openings and Labor Turnover Survey (JOLTS), which serves as a key indicator of labour demand.
Economists expect the report to show 6.89 million job openings in February, slightly down from 6.946 million in January.
Although the data largely predates the escalation of the Middle East conflict, it remains closely monitored as a measure of the labour market’s strength before the geopolitical shock. The report also acts as a precursor to the more comprehensive nonfarm payrolls report for March, which will be released on Friday.
Officials at the Federal Reserve will be closely examining the employment data, particularly as inflation pressures begin to build. Employment and inflation remain the central pillars guiding the Fed’s monetary policy decisions.
Eurozone inflation data in focus
Investors are also awaiting the release of Eurozone inflation figures for March, which may provide further insight into the economic effects of the Middle East conflict.
Europe depends heavily on natural gas imports from the Gulf region, especially from Qatar, where energy facilities have reportedly been targeted in Iranian air strikes.
Officials at the European Central Bank (ECB) have indicated that interest rate increases could be considered if rising energy costs reignite inflation across the currency bloc. ECB President Christine Lagarde has said policymakers may need to respond even if the surge in prices proves temporary.
Economists expect headline inflation to rise to 2.6% in March, up from 1.9% in February. The ECB’s medium-term inflation target remains 2.0%.
Expectations of a potential ECB rate hike have pushed European government bond yields higher in recent sessions, although they were largely steady ahead of Tuesday’s inflation data release. Bond yields typically move inversely to bond prices.