Dow Jones Forecast: DJIA rises as oil falls sharply

US futures                                            

Dow futures 0.4%, S&P futures 0.35%  & Nasdaq futures 0.5%

In Europe                                                                           

FTSE -0.45% & DAX -0.45%

• US stocks are muted amid contradictory comments over the Iran war
• Trump said the war could end soon, but the US Defence Secretary doesn’t
• Oil slumps from $120 to below $90 per barrel

Stocks edge higher with the duration of the Iran war in focus

U.S. stocks started Tuesday modestly higher amid a cautious mood after comments from U.S. officials pointed to an escalation of the war in the Middle East rather than to the war ending soon, as Trump suggested.

US Defence Secretary Pete Hegsesth and top US general Dan Caine suggested that strikes against Iran were in fact intensifying rather than easing. These comments come a day after President Trump said the Iran war would end soon.

Even so, the oil price is significantly below yesterday’s almost 4-year high, but will likely remain elevated while headlines continue to drive market moves. The decline in oil prices has led to a decline in treasury yields. The 10-year treasury yield is -0.019 at 4.115%. Should yields fall lower, this could provide further support for stocks.

Still, the market will want to see clear signs that hostilities in the Middle East are easing. Fundamentally, nothing has changed on the ground in Iran just yet. As a result, the mood will likely be cautious until there are more tangible signs of this and the Strait of Hormuz re-opening.

Corporate News

Kohl’s is falling 9% after the retailer posted disappointing results, with Q4 revenue of $4.97 billion, below the $5.03 billion forecast. Q4 EPS was $1.07, exceeding expectations of $0.85.

Taiwan Semiconductor is rising 1% after reporting a 30% increase in sales over the first two months of the year.

Hewlett-Packard is rising 1% after earnings. HPE earned $0.65 in Q1 ahead of the $0.59 forecast. Revenue came in below the $9.33 billion forecast at $9.30 billion.

Dow Jones forecast – technical analysis.

The Dow Jones fell to 46,300 before rebounding higher. The price respected the 200 SMA, and the long lower wick on yesterday’s candle is an encouraging sign. However, buyers need to rise above 48k and 48,400k resistance; this puts the price on a more stable footing. Failure to rise above 48k could see the price rebound lower towards 46,500, the 200 SMA. A break below here creates a lower low.

FX markets – USD falls, GBP/USD rises

The U.S. Dollar is falling as the market weighs up the prospect of a shorter conflict in the Middle East. However, mixed messages from Washington and Tehran warrant caution.

EUR/USD is unchanged on Tuesday, after booking modest gains yesterday, but remains 1.5% lower than where it was at the start of the month, due to concerns about stagflation since the start of the Middle East conflict.

GBP/USD is modestly higher at 13415 on U.S. dollar weakness, improving risk sentiment, and low oil prices and inflation concerns weighing on Britain's import-dependent economy. UK fundamentals remain pretty poor. GDP data is due later in the week.

Oil slumps below $90

Oil prices have fallen 7%, sharply dropping from $120.00 a barrel, an almost four-year high yesterday, to around $90.00 at the time of writing .

The move lower in oil prices comes after Trump said he sees the war in the Middle East ending soon, noting that the US was ahead of its four-to-five-week timeline.

Trump's comments have calmed fears of a prolonged war. However, fundamentally, right now, very little has changed, with the Strait of Hormuz still not seeing vessels transit through.

Discussions about easing sanctions and rushing oil, combined with G7 countries tapping strategic reserves, have all pointed to oil reaching the market at some point.

However, volatility is likely to remain elevated until there are clear signs of the Starit reopenings.