US stock futures jumped on Tuesday, while oil prices slumped amid hopes that a US-brokered ceasefire between Israel and Iran could lay the groundwork for a more permanent end to hostilities.
Dow Jones Industrial Average futures (YM=F) rose 0.7%, while those on the S&P 500 (ES=F) moved up roughly 0.8%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the advance, up 1%.
A relief rally is building amid hopes for a lasting end to a 12-day-old conflict that has spooked markets with its risks of squeezed oil supply and escalation into full-blown war. On Monday, US stocks rose as Iran’s response to US attacks signaled a desire to deescalate tensions.
President Trump said on Tuesday that the pause in hostilities had begun, after Israel confirmed it had agreed to the “complete and total” truce announced by the US leader late on Monday.
“THE CEASEFIRE IS NOW IN EFFECT. PLEASE DO NOT VIOLATE IT!” Trump wrote on social media early on Tuesday morning.
But just hours later, Israel accused Iran of breaching the ceasefire, saying it had detected missile launches from the country and would respond strongly to them. Tehran has denied it launched strikes.
Oil prices sank overnight as the prospect of a truce eased worries about disruption to supply of crude, centered on the risk that Iran would block the key Strait of Hormuz conduit for tankers. At one point, Brent futures (BZ=F) dipped below their level just before hostilities broke out almost two weeks ago.
Brent was still over 3% lower near $68 per barrel as the truce came into question, while West Texas Intermediate (CL=F) also fell to hover at around $66 per barrel.
Investors are also waiting for Jerome Powell to testify before the House Financial Services Committee, as Trump turns up the pressure on the Federal Reserve chair to cut interest rates. Powell is likely to say that the Fed can afford to hold rates steady as officials evaluate the unknown effect of Trump’s trade policies on inflation.
Carnival Corporation (CCL), FedEx (FDX), BlackBerry (BB) are due to report earnings.
LIVE 4 updates
