Futures linked to the main U.S. averages tick higher, buoyed by burgeoning hopes that the U.S. is seeking an impending off-ramp from the war in Iran. Oil prices also sink back below $100 a barrel, but remain well above levels prior to the start of the conflict. Elsewhere, shares of Nike drop in after-hours dealmaking amid ongoing softness in sales in China.
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U.S. stock futures pointed higher on Wednesday as jittery investors appeared to take some relief from signals that the U.S. is nearing the end of its more than month-long campaign in Iran.
By 03:25 ET (07:25 GMT), the Dow futures contract had increased by 270 points, or 0.6%, S&P 500 futures had ticked up by 43 points, or 0.7%, and Nasdaq 100 futures had inched higher by 227 points, or 1.0%.
The main averages on Wall Street rallied on Tuesday, spurred on by growing optimism that the U.S. will soon exit its joint assault with Israel against Tehran, which has escalated into a wider war threatening to engulf countries around the Middle East.
Underpinning these expectations was a Wall Street Journal article suggesting that U.S. President Donald Trump had told aides that he was open to leaving the war even if the Strait of Hormuz remained largely blocked to tanker traffic. In later remarks to reporters and posts on social media, Trump effectively confirmed the report, analysts at Vital Knowledge said in a note to clients.
Trump also reiterated that negotiations with Iran are going well, a claim that has been frequently disputed by officials in Tehran. However, Iran did acknowledge that messages are being exchanged between both sides, while the country’s president indicated that Iran has the "necessary will" to end the war should it receive guarantees that it will not be attacked again.
"Risk sentiment has been stabilizing as equities recover and bond spreads ease. Amid the mixed messaging, there were already signs that U.S. President Trump was looking for a way out; markets pounced on headlines that the Iranian president was willing to end the conflict, albeit sticking to Iran’s demands," analysts at ING said in a note.
2. Oil slides after Trump comments
In perhaps one of the clearest signs of relief among wary traders, oil prices sank back below $100 a barrel on Wednesday.
Futures contracts expiring in June for Brent crude, the global oil benchmark, were last down by 4.2% at $99.60 a barrel. Following the outbreak of the war in late February, Brent had spiked to as high as almost $120 a barrel, compared to pre-conflict levels of around $70 a barrel.
Fueling the uptick was the effective closure of the Strait of Hormuz, a vital waterway tracing Iran’s southern coast through which about a fifth of the world’s oil flows. The constant threat of Iranian drone or missile attacks on vessels brought tanker traffic to all but a trickle, sparking fears over crucial supplies to countries around the globe.
