Futures Ease While Investors Question Strength of U.S.-Iran Agreement
U.S. stock futures traded slightly lower on Friday after a strong rally on Wall Street fuelled by optimism that the recently announced U.S.-Iran peace agreement would hold. At the same time, oil prices continued to retreat as traders anticipated that the reopening of the Strait of Hormuz could improve global crude supply flows.
However, the unexpected cancellation of planned nuclear discussions between Washington and Tehran has prompted investors to reconsider whether the diplomatic breakthrough can be sustained over the longer term.
Wall Street Closed for Juneteenth Following Strong Session
U.S. markets remained closed on Friday in observance of the Juneteenth holiday after posting gains in the previous session.
Stocks recovered from losses recorded after the Federal Reserve’s latest policy meeting, which signalled a potentially more hawkish outlook for interest rates. The S&P 500 advanced 1.1%, while the Dow Jones Industrial Average edged 0.1% higher. The Nasdaq Composite outperformed, climbing 1.9%.
Semiconductor stocks led the gains after President Donald Trump announced that Apple had agreed to collaborate with Intel on chip production in the United States, boosting sentiment across the technology sector.
Laurence Booth, Global Head of Markets at CMC Markets, warned that investors may be underestimating ongoing geopolitical risks.
He said: “A key question for investors is whether markets have become too comfortable with the assumption that geopolitical risks are fading.”
He added: “Recent gains in equities have been supported by expectations of de-escalation, but stalled negotiations suggest the underlying issues remain unresolved. That leaves markets vulnerable to any deterioration in sentiment heading into next week.”
Cancellation of Nuclear Talks Raises Fresh Uncertainty
New concerns emerged after scheduled talks between U.S. and Iranian officials in Switzerland were abruptly cancelled.
The meeting was expected to focus on Iran’s nuclear programme and build on the memorandum of understanding recently signed by both countries following their conflict. The discussions were called off shortly after U.S. Vice President JD Vance withdrew from the planned negotiations.
According to Iranian media reports, Tehran is seeking stronger evidence that Washington is implementing the agreed measures before committing to further diplomatic engagement. While the cancellation does not necessarily signal the collapse of the agreement, it highlights the fragility of the current situation.
Investors remain alert to the possibility that renewed tensions could disrupt energy supplies, reignite inflation concerns and increase volatility across financial markets.
Oil Prices Head Toward Sharp Weekly Decline
Crude prices continued to weaken on Friday and remain on course for their largest weekly drop in several months.
Brent crude futures fell 1.1% to $79.01 per barrel, while U.S. West Texas Intermediate crude declined 0.7% to $76.05 per barrel. Both benchmarks are set to record weekly losses approaching 10% and are trading near their lowest levels since early March.
The decline has been driven largely by expectations that the U.S.-Iran agreement will eventually restore additional supply to global energy markets. A key element of the accord involves the gradual reopening of the Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas shipments pass.
ASML Faces Renewed U.S. Scrutiny
Shares in ASML (EU:ASML) moved lower in early European trading after reports that U.S. officials had questioned whether one of the company’s advanced chipmaking systems may have found its way into China.
Bloomberg reported that U.S. Commerce Secretary Howard Lutnick recently raised concerns with ASML executives regarding a potential extreme ultraviolet (EUV) lithography machine operating in China despite export controls.
ASML rejected the suggestion, stating that it has never supplied an EUV machine to China and that no such systems are installed there.
The episode highlights the continuing technology dispute between Washington and Beijing, with advanced semiconductor manufacturing equipment remaining a major point of contention.
Pentagon Reportedly Seeking $80 Billion in Additional Funding
According to a Wall Street Journal report, the U.S. Department of Defense requires approximately $80 billion to cover expenses linked to the Iran conflict and other strategic priorities.
The newspaper said Deputy Defense Secretary Stephen Feinberg informed lawmakers of the funding requirement during discussions this week. A supplemental spending request could be submitted to Congress shortly and may also include support for agricultural programmes and disaster relief.
Market participants will be monitoring developments closely, as large-scale government spending plans can influence budget deficits, Treasury issuance and expectations for future interest rate policy.