Pre-market: Nasdaq futures down 0.3%, oil prices back above $100

On Tuesday, European and U.S. stocks fell in choppy trading, while oil prices rose. Because the range of possible outcomes from the Middle East war is extremely wide, and fighting is still ongoing, with President Trump pushing negotiations as well, traders are struggling to assess the situation. Investors still have no clear view on how the Middle East war will unfold.

U.S. stock index futures edged lower. Dow Jones Industrial Average and S&P 500 futures both fell 0.3%, while Nasdaq index futures, led by technology stocks, also fell 0.3%.

In Europe, the STOXX 600 index fell 0.4%. After all, the index had risen 0.6% in Monday’s sharp volatility. Asian markets, meanwhile, closed higher across the board, though they have moved away from their intraday highs.

After Trump said on Monday that, following what he called a “productive meeting,” the war could be coming to an end, traders continued to digest a large volume of news about a possible U.S.-Israel conflict with Iran. Positive sentiment prompted by his remarks faded, as reported by The Wall Street Journal that the U.S. allies in the Persian Gulf region are gradually approaching joining operations against Tehran.

Israeli officials said on Tuesday that Trump wants to reach a deal with Iran, but that any negotiations are unlikely to succeed at this stage.

IG market analyst Tony Sycamore said: “The potential situation is still extremely fragile—one match away. It looks like not all the relevant parties are on the same page… Trump can say whatever he wants, but (the Strait of Hormuz) is closed right now, and it will stay closed until there is agreement on all matters from the Iranian side—which is the problem.”

Oil prices rise above $100

As the war continues, and with roughly one-fifth of global oil and liquefied natural gas shipments through the Strait of Hormuz still constrained, oil prices resumed their upward move on Tuesday.

After Trump announced a delay in action, oil prices fell as much as 15% yesterday; however, on Tuesday, they turned back toward $100 per barrel. Brent crude rose 2.2% to trade above $102 per barrel.

European natural gas prices fell. The benchmark Netherlands TTF near-month contract fell 1.6% to €55.78 per megawatt-hour, after it had plunged sharply on the prior trading day. An analyst at ANZ Bank wrote that compared with oil prices, the selloff in gas has been relatively mild, “because recent damage to local infrastructure will have a persistent impact on supply.”

Arnaud Girod, head of cross-asset strategy at Kepler Cheuvreux, said: “This is a very tricky situation. If an agreement is reached within five days, the market could rebound, and investors may be able to temporarily ignore this crisis; but if no agreement is reached, a recession becomes possible. The range of outcomes is still very large, which also explains why market volatility has been so intense.”

The big swings in the market show that investors remain cautious. Renewed tensions could keep oil prices elevated, driving inflation higher and reinforcing expectations that policymakers will delay easing, or even further tighten monetary policy.

Thomas Mathews, head of Asia-Pacific markets at Capital Economics, said: “This war has already caused persistent damage to infrastructure, so even if the war ends soon, energy prices are likely to remain high for a longer period, while bond and stock prices may remain low for a longer period.”

Gerald Gan, chief investment officer at Reed Capital Partners Singapore, said: “Until I see Iran’s next move in this war, I don’t currently have much hope for this bet.” Gan said he has increased his cash position while also adding S&P 500 index put options.

The situation remains highly tense

Iran fired missiles and drones overnight at Israel’s Eilat, Dimona, and Tel Aviv, as well as U.S. military bases in the Middle East region. Saudi Arabia said a drone was intercepted in its eastern region; Kuwait said that after Iran’s attack, some transmission lines stopped operating. Bahrain also sounded air-defense alerts.

Meanwhile, Semafor cited a U.S. official as saying the U.S. will continue strikes against Iran, with the pause measures applying only to attacks targeting Tehran’s energy facilities. On Iran’s side, Fars News Agency reported that strikes carried out by the U.S. and Israel damaged a natural gas pressure regulating plant and an administrative building located in the central city of Isfahan. Fars also said that a natural gas pipeline in Iran’s southwest leading to the Khoramshahr combined-cycle power plant was also hit by an attack.

Anna Wu, a cross-asset strategist at Van Eck Associates Corp., said the market is currently still on “high alert” for what happens next. She said: “Most investors are still waiting for some form of negotiations between Iran and the U.S. to be confirmed, in order to seek a clearer direction.”

Giving up hopes for central bank easing

With still no clear signs that the conflict has ended, traders are starting to price in a more hawkish global interest-rate outlook. U.S. Treasury yields rose again after an overnight plunge on Tuesday. The yield on the two-year U.S. note rose by as much as 8.5 basis points to a high of 3.916%, before falling back to around 3.882%, still up 5 basis points on the day. The benchmark 10-year U.S. note yield rose 3 basis points to 4.368%.

In the eurozone, the Netherlands and Germany will each conduct Treasury bond auctions. The Netherlands will sell super-long-dated bonds, while Germany will issue bonds with shorter maturities. U.K. government bond yields also retreated from Monday’s highs.

The inflation shock driven by energy has led investors to abandon hopes for additional global monetary easing, turning instead to betting that most developed economies will raise rates.

Market expectations are that the Federal Reserve will keep rates unchanged this year, and futures indicate only a small chance of rate hikes; at the same time, the Bank of England and the European Central Bank are widely seen as likely to raise rates.

Kit Juckes, FX strategy head at Société Générale, said: “Unless (the Strait of Hormuz) reopens very quickly, in the next few weeks we are more likely to see higher rates, and a significant rise in costs for oil-importing countries.”

Gold shakes

Meanwhile, the dollar rebounded from Monday’s low, pushing the euro down 0.27% to $1.1581; the pound fell 0.5% to $1.339.

For precious metals, spot gold held steady around $4,400. Before Trump announced the relevant news on Monday, gold briefly fell to a four-month low, breaking below $4,100, as markets expected U.S. interest rates to remain high for a longer period. An analyst at Saxo Bank said: “Gold has been sold off because it is still one of the few highly liquid assets that have kept gaining over the past year.”

Wall Street now only recognizes this “hardcore” track

After an uneven start for U.S. stocks this year with an uncertain outlook, there is only one trading main theme that has remained consistently strong: going long on memory chips and data storage.

Rob Thummel, senior portfolio manager at Tortoise Capital, said: “What’s being sold are large tech giants, which are performing poorly; while the direction where money is flowing is infrastructure, memory chips, and data storage.”

Jamie Zakalik, senior semiconductor industry analyst at Loomis, said: “The memory segment is showing unprecedented growth potential, along with significant pricing power. While the word ‘safe’ may not be entirely accurate, compared with other parts of the AI industry chain, these companies’ investment certainty is clearly higher.”

SanDisk is considered the top bull stock in the S&P 500 over nearly the past two years; since it went public in February 2025, its gains have already exceeded 1,850%. Western Digital and Seagate are both among the top 20 gainers in the S&P 500. Micron, though its stock fell 12% after last week’s earnings report raised market concerns about its aggressive expansion plans, still surged 42% for all of 2026 and ranked among the top 25 gainers.

By comparison, the S&P 500 is down 3.9% cumulatively this year. The Nasdaq 100 index, with a higher technology weighting, is down 4.2%. The Philadelphia Semiconductor Index is up just 9.7%.

Focus stocks

Jef eries gained more than 15% before the bell at one point; it was reported that the Mitsui Sumitomo Financial Group intends to acquire the investment bank.

Earnings beat expectations: U.S. largest pork processor Smithfield Foods rose about 5% before the bell.

Apollo Global Management fell more than 3% before the bell due to a surge in redemptions limiting withdrawals from one of its private credit funds.

Li Auto rose more than 4% before the bell after announcing a $1 billion stock repurchase plan.

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责任编辑：郭明煜