Dow Jones Forecast: DJIA slumps in risk-off trade amid Middle East escalation
U.S. stocks are falling in risk-off trade after Israel launched an attack on Iran overnight, hitting risk sentiment and pulling stocks lower, whilst oil prices surged. Safe haven Gold has rallied, and the USD has also seen safe haven demand for the first time in months. Headline risk remains a key driver and developments over the week could impact Monday's open.
Share this:
US futures
Dow futures -1.42% at 42,505
S&P futures -1% at 5985
Nasdaq futures -1.27% at 21630
In Europe
FTSE -0.12% at 8868
DAX -1.46% at 23442
- US stocks slump & safe havens rally on Iran attack
- Boeing falls after plane crash
- Oil spikes on supply concerns as Middle East tensions rise
US stocks fall on risk-off trade
U.S. stocks are falling in risk-off trade after Israel launched an attack overnight, hitting risk sentiment, whilst oil prices surged.
Israel's airstrikes against Iran's nuclear programme and ballistic missile sites renewed the standoff between the two countries that risks broadening out into the wider region. While he biggest reaction seen in crude oil, the risk off flows suggests investors are uncertain over how long tensions will last and whether they will escalate further.
Stocks in Asia, Europe, and US futures are under pressure, while safe-haven gold spiked to a peak of 3444, a level last seen, and the price rose to its record high in April.
In the short term, this is likely being seen as a good excuse for taking some profit after solid gains in the equity market.
The news comes amid a jittery market after President Trump warned that a wide range of trading partners would be advised of unilateral trading tariffs in the coming weeks as the July 9 deadline looms nearer.
On the data front, University of Michigan sentiment will be in focus and is expected to show a slight improvement. The data comes ahead of retail sales next week and the Federal Reserve interest rate decision, where the central bank is expected to leave rates unchanged until it becomes clearer how tariffs impact the US economy.
Corporate news
Tesla is falling over 1% after the EV manufacturer upgraded its Model S and Model X cars in the US while raising their prices by $5000.
Apple is outperforming the broader market after data from Counterpoint Research showed iPhone sales rose to the top spot in China last month, and the global sales group increased 15% year on year in April and May.
Oil majors such as Chevron and Exxon are gaining around 3% as crude oil prices soared to their highest level since late January.
Airlines such as Delta Airlines, United Airlines, Southwest Airlines, and American Airlines are all dropping sharply amid a surge in crude oil prices and concerns over higher fuel costs.
Defence stocks such as Lockheed Martin and Northrop Grumman are on the rise amid heightened geopolitical tensions.
Dow Jones – technical analysis.
The Dow Jones recovery from April lows pushed above the 200 SMA before running into resistance around 42,800. The price is easing lower, testing the 200 SMA at 42,600 after briefly sparking to a low of 42,175. Should sellers close below the 200 SMA, the door opens to 41,800 horizontal support. Should the 200 SMA hold, buyers will look to extend gains above 43,150 towards 44,000.
FX markets – USD falls, EUR/USD rises
The USD is rising, recovering from a multi-year low yesterday, boosted by safe-haven flows. For the first time in months, the USD is behaving like a safe haven. However, with Trump’s trade tariff uncertainty lingering, the USD could find the upside limited.
The EUR/USD is falling to 1.1550, back from yesterday’s multi-year high, as the USD rises and on risk aversion. German CPI confirmed 2.1% while eurozone industrial production fell 2.4% YoY in April.
GBP/USD is falling amid a stronger USD and in risk-off trade. Pension is turning to the Bank of England interest rate decision next week. The central bank is likely to keep interest rates unchanged as inflation remains at 3.5% and despite signs of weakness in the UK jobs market.
Oil soars after Israel attacks Iran.
Oil prices have surged by as much as 11% at one point on Friday, but have eased back to 7% gains on the day after Israel launched strikes against Iran.
Tensions in the Middle East are ramping up, raising concerns about oil prices lifting the risk premium on oil. These were the largest intraday moves seen in oil contracts since 2022.
Headlines will be watched closely, particularly given concerns over whether the latest developments will affect the Strait of Hormuz. This key waterway sees around 1/5 of the world's consumption passing through it. So far, there has been no disruption.
Where oil prices go from here depends on whether there is further escalation over the weekend and then into next week.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Nasdaq 100 Forecast: NDX rises further with Middle East developments in focus
U.S. stocks are heading for a modestly stronger start as investors awaited developments over potential talks between the U.S. and Iran.
S&P 500 Forecast: SPX higher as oil & yields fall, AI stocks rise
U.S. stocks have opened higher as Treasury yields retreat and crude oil prices fall to an 11-day low.
Nasdaq 100 Forecast: NDX extends gains as oil, Treasury yields fall
U.S. stocks are heading higher, extending yesterday's post-Fed bounce, with the tech-heavy Nasdaq leading the way as falling oil prices help ease inflation concerns.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.