US futures
Dow futures -1.7%, S&P futures -1.7% & Nasdaq futures -2.2%
In Europe
FTSE -2.6% & DAX 3.85%
- US stocks tumble amid no signs of the conflict de-escalating
- Persistently high oil prices could raise inflation
- Airlines and travel stocks fall, energy, defence and miners rise
- Oil continues to soar higher
Stocks plummet as inflation fears rise
U.S. stocks are set to open sharply lower on Tuesday as investors fret over the widening conflict in the Middle East and the impact on inflation and global trade.
Tehran has threatened to attack any vessel attempting to cross the Strait of Hormuz, which, combined with production halts by oil and gas producers and several Middle Eastern countries, has driven up energy prices and global shipping rates.
Rising energy prices are damaging for the global economy, raising inflationary fears and prompting markets to push back against rate-cut expectations.
The US 10-year Treasury yield rose to its highest level in over a week, as the market now expects the Fed to cut rates in September rather than in July.
Investors will be watching for signals from Fed speakers on the path forward for rates, with John Williams, Jeffrey Schmidt, and Neel Kashkari scheduled to speak today.
Corporate News
MongoDB is falling 26% after the database software firm forecast quarterly profits below expectations, raising concerns about AI disrupting the traditional business model.
Target is rising 4% after the new CEO pledged to return to sales growth and issued an upbeat profit outlook amid signs of a turnaround at the struggling retailer.
Energy and defence stocks continue to outperform while travel stocks and airliners are the biggest losers.
S&P500 forecast – technical analysis.
The S&P500 has broken below the 6800 support with vigour and tested the 6730 support, the February low. This, combined with the bearish engulfing candle and the RSI below 50, keeps sellers hopeful of further downside. Sellers will need to break below 6730 to expose the 200 SMA at 6590 and below here, 6500. On the upside, near-term resistance is at 6800. Above here, the 50 SMA is at 6900.
FX markets – USD rises, EUR/USD falls
The U.S. Dollar is rising again as it proves to be the safe haven of choice on the 4th day of the rainy and war. The dollar is benefiting from safe-haven flows and from the US being the next net exporter of oil. The market is also pushing back against expectations of a Fed rate cut.
EUR/USD is falling, extending yesterday's gains, and is down around 1.9% over the past two sessions. The euro has come under pressure given its reliance on imported energy. Hotter than expected eurozone inflation failed to boost the euro, with the HICP rising 1.9% up from 1.7%.
GBP/USD is falling, dropping to its lowest level since early November, amid a stronger U.S. dollar and as investors reacted to Chancellor Rachel Reeves downgraded growth forecasts. While surging energy costs could push the Bank of England towards a more hawkish stance, domestic political and economic developments are pressurising the pound. The Office for Budget Responsibility lowered the UK growth forecast to 1.1% for 2026, down from 1.4% projected in November. The agency also lowered borrowing and inflation over the coming time period.
Oil soars further as the Starit of Hormuz closes
Oil prices extended gains Tuesday as the escalating US-Israel conflict with Iran fuels fears of supply disruption across the Middle East.
The closure of the Strait of Hormuz, a vital chokepoint for global oil and gas, signals Tehran’s willingness to target regional energy infrastructure.
Tankers are avoiding the route following Iranian warnings, while insurers are withdrawing coverage, sending shipping costs sharply higher. With no sign of quick de-escalation and US officials warning the conflict could last weeks, upside risks to crude remain significant.
However, any easing of tensions or reopening of the Strait could quickly push prices back below $65 per barrel.
