S&P 500 Futures Slip as Trump-Iran War Claims Clash

S&P 500 futures edged lower after President Donald Trump declared the Iran war “very complete,” only for Iran’s Revolutionary Guards to vow continued missile strikes. Oil prices swung sharply lower from early highs as traders weighed threats from both sides and the potential impact of Iran’s oil blockade. Asian equities rallied strongly, led by gains in Japan’s Nikkei and South Korea’s Kospi, while European futures signalled modest gains for the DAX and FTSE 100.

Equities

The FTSE 100 closed 0.3% lower on Monday, marking its lowest level in around five weeks as rising oil prices intensified concerns about inflation and interest rates. The FTSE 250 declined more sharply, ending the session down 1.8% and extending its recent run of losses. The weakness came as crude prices surged during the session amid escalating tensions in the Middle East, which raised concerns about renewed pressure on household energy costs and government finances in the UK. UK borrowing costs also moved higher while sterling fell during Monday’s trading. Money markets have largely scaled back expectations for Bank of England rate cuts this year as energy prices threaten to push inflation higher again.

Energy companies provided one of the few areas of strength on the London market. Shares in Shell closed 2.4% higher on Monday, while BP rose 2.2%. Both companies tracked the sharp rise in crude prices earlier in the day, with oil briefly climbing above $119 per barrel, its highest level since 2022. The gains in the energy sector helped limit broader declines across the FTSE 100 even as other sectors faced pressure from rising inflation expectations and the prospect of tighter monetary policy.

Across the Atlantic, US equities recovered from a sharp early selloff to finish the session higher on Monday. The Dow Jones Industrial Average closed 0.50% higher at 47,740.80, while the S&P 500 rose 0.83% to 6,795.99. The Nasdaq Composite led gains, climbing 1.38% to 22,695.95. Markets turned higher late in the session after US President Donald Trump suggested the conflict involving Iran could end sooner than initially expected, easing concerns about prolonged disruption to global energy supplies.

Technology stocks drove much of the rebound on Wall Street. Shares of Nvidia, Broadcom and SanDisk all moved higher on Monday, with gains ranging from roughly 2.7% to 11.7% as chipmakers rebounded alongside the broader technology sector. The Philadelphia Semiconductor Index also posted a strong recovery.

Other sectors lagged behind. US bank stocks, homebuilders and aerospace and defence companies finished the day lower as investors weighed the impact of higher energy prices and a weaker-than-expected US employment report released late last week. The combination of rising costs and slowing economic indicators has raised concerns that the Federal Reserve could face pressure from both inflation and weaker growth in the months ahead. Markets currently expect the central bank to keep interest rates unchanged through at least the first half of the year, with several key economic reports later this week, including US inflation data, expected to shape the outlook for monetary policy.

Forex & Commodities

The US dollar was broadly firmer in Asian trading after pulling back from Monday’s highs, with the currency trading at ¥157.7 against the Japanese yen and around $1.163 against the euro. Sterling also recovered some ground following a dip late on Monday, holding at roughly $1.343 in early trading.

Oil prices fell sharply early this morning after US President Donald Trump suggested the conflict in the Middle East could end “very soon”. Brent crude traded around $92.68 per barrel after surging above $100 and reaching levels close to $120 during Monday’s spike. Traders reacted to the prospect of a quicker resolution to the conflict and to reports that the United States may consider easing sanctions on Russian oil or releasing strategic reserves to stabilise supply. Even so, crude remains well above pre-war levels after the fighting disrupted flows through the Strait of Hormuz, a critical route for global energy shipments.

Gold moved higher this morning as the softer US dollar and easing oil prices reduced short-term inflation concerns. Spot gold traded near $5174 per ounce, recovering from a fall late on Monday when rising energy costs raised expectations that interest rates might stay elevated for longer. The weaker dollar made bullion more affordable for buyers using other currencies.