US equity-index futures fell, the dollar strengthened after the Wall Street Journal reported that US allies in the Persian Gulf are inching toward joining the fight against Iran.
Contracts for the S&P 500 erased earlier gains to fall 0.3% and a Bloomberg gauge of the dollar rose 0.2% after the WSJ report. Asian shares also pared earlier gains after an Iranian lawmaker ruled out negotiations with the US. Gold reversed earlier gains to edge lower for a 10th consecutive day.
Asian equities had earlier tracked Wall Street higher after President Donald Trump signaled a delay in planned strikes on Iranian energy infrastructure, citing talks with Tehran and boosting hopes for de-escalation in the Middle East.
ALSO READ: 'No Talks With US': Iran's Parliament Speaker Says Trump Using Fake News To Manipulate Oil Market
Brent crude rose 2% to almost $102 a barrel. The Strait of Hormuz remained effectively shut with only a trickle of vessels making their way through the key waterway. The commodity had plunged 11% on Monday following Trump's comments.
The moves underscore how quickly geopolitics can sway global markets, with the Strait — a chokepoint for about a fifth of global oil and LNG flows — at the center. Since the conflict began, disruptions to traffic through the narrow waterway have driven sharp price swings and heightened inflation risks, leaving progress in US-Iran talks pivotal to stabilizing energy markets and broader financial conditions.
Trump had told reporters on Monday that he was holding off on striking Iranian energy infrastructure for five days, citing “major points of agreement” with Iran.
The US president said special envoys Steve Witkoff and Jared Kushner had discussions Sunday into the evening with a “top person” on the Iranian side, claiming both parties were keen to “make a deal” and would talk again Monday by phone.
The abrupt shift caught traders off guard. There had been little sign of diplomatic progress before the US president's post.
ALSO READ: FPI Outflows Cross Rs 93,000 Crore In March, Highest Since October 2024
US officials have been quick to try and talk down energy markets in recent weeks and Trump's remarks on Monday about an end to the war were the latest in a run of comments that appear designed to tame prices.
Elsewhere, the yen held steady after Japan's key inflation gauge slowed more than expected to its weakest pace in nearly four years. Treasuries also edged lower with the yield on the benchmark 10-year rising two basis points to 4.36%.
The key to de-escalation is not rhetoric, but financial conditions, said Noureldeen AlHammoury, chief market strategist at Equiti Group in Dubai.
If oil sustains above $120, US 10-year yields approach 4.75%, and equities see a sharp drawdown, the situation quickly becomes an economic problem rather than a geopolitical one, he said.
“That is the point where policy shifts and de-escalation become more likely,” he added. “We have seen a similar pattern before — when financial conditions tightened sharply during prior tariff escalations, policy tone shifted quickly to stabilize markets.”
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.3% as of 9:47 a.m. Tokyo time
- Hang Seng futures rose 2.8%
- Nikkei 225 futures (OSE) rose 1.9%
- Japan's Topix rose 2%
- Australia's S&P/ASX 200 rose 0.5%
- Euro Stoxx 50 futures fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.1586
- The Japanese yen fell 0.1% to 158.62 per dollar
- The offshore yuan fell 0.1% to 6.8925 per dollar
Cryptocurrencies
- Bitcoin fell 0.4% to $70,641.71
- Ether fell 0.8% to $2,143.39
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.36%
- Japan's 10-year yield declined 2.5 basis points to 2.280%
- Australia's 10-year yield declined eight basis points to 5.04%
Commodities
- West Texas Intermediate crude rose 3.1% to $90.86 a barrel
- Spot gold fell 1% to $4,364.91 an ounce
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.