US stock futures advanced during European hours on Tuesday, with Dow Jones futures gaining 0.53% above 50,900, the S&P 500 rising 0.54% toward 7,550, and Nasdaq 100 futures up 0.73% above 29,750, despite ongoing market caution following US military action in southern Iran on Monday. The US conducted self-defense strikes targeting missile launch sites and Iranian vessels attempting to deploy mines, while emphasizing its commitment to protecting its forces and maintaining restraint during the ceasefire [1].
US President Donald Trump warned that a collapse in talks could lead to renewed military attacks, though a Pakistani mediator reportedly told China that an agreement was close. Bloomberg reported that President Trump stated negotiations to end the conflict and reopen the Strait of Hormuz were 'proceeding nicely.' Traders are closely monitoring diplomatic progress on a potential peace agreement between the US and Iran [1].
Market participants remain cautious due to concerns about an energy-driven inflation shock, which has increased expectations that the Federal Reserve may tighten monetary policy. According to the CME FedWatch tool, there is now a nearly 41.0% probability that the Fed will implement a 25-basis-point interest rate increase by the end of the year. Investors are also awaiting upcoming PCE inflation data for clearer signals on the Fed’s future policy direction [1].
CONCLUSION
US stock futures showed resilience and posted gains despite heightened geopolitical tensions following US strikes in Iran. Market sentiment remains cautious, with traders attentive to diplomatic developments and the potential for inflation-driven Fed tightening. The upcoming PCE inflation data is expected to provide further guidance on monetary policy.