US stock futures traded modestly higher on Monday, 14 April, amid hopes that a deal between Washington and Tehran was still possible, even as the US blockades Iranian shipments in the Strait of Hormuz.
These hopes also led to a decline in crude oil prices and the dollar, further aiding the ongoing rally in all three key indices.
The major averages posted solid gains to start the week, even after US-Iran negotiations over the weekend broke down. Meanwhile, futures for the three key indices—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq—were trading higher in the range of 0.1%–0.4% on Tuesday.
Negotiating teams from the US and Iran could return to Islamabad this week, Reuters reported, citing four sources. This comes days after the highest-level talks between the two countries since the 1979 Islamic Revolution ended in the Pakistani capital without a breakthrough.
US President Donald Trump said Iran wants to make a deal, but added he would not agree to any outcome that allows Tehran to possess a nuclear weapon. Hopes of a diplomatic off-ramp have helped push the S&P 500 back to pre-war levels, driven largely by gains in big tech stocks as the first-quarter earnings season begins.
Meanwhile, the US military has begun a blockade of Iran’s ports, angering Tehran and adding uncertainty around the key Strait of Hormuz. However, shipping data showed that a US-sanctioned Chinese tanker passed through the waterway on Tuesday.
Trump said Washington would block Iranian vessels and any ships paying tolls demanded by Tehran, adding that any Iranian “fast-attack” ships that come near the blockade would be eliminated.
On the earnings front, JPMorgan Chase posted better-than-expected first-quarter results, earning $5.94 per share on revenue of $50.54 billion. Wells Fargo also reported its first-quarter numbers, but its shares slipped 1% in the pre-market session as investors appeared disappointed with the results.
Among other stocks, Novo Nordisk shares jumped 3% after the company announced a partnership with OpenAI.
Crude oil prices retreat
The benchmark US crude retreated by $4 to $95 a barrel. Brent crude, the international benchmark, also dropped $2.77 to $96.59 a barrel. In the previous session, both benchmarks had closed with gains of up to 4.3% as tensions resurfaced in the region, reigniting supply disruption concerns.
Although prices have cooled, they remain significantly above pre-war levels, with Brent still up about 40% in less than two months.
Rising energy prices have fuelled inflation concerns and prompted investors to prepare for the possibility that several major central banks may tilt towards rate hikes, a sharp reversal from pre-war expectations of rate cuts or an extended pause.
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