19.06.2025 13:05

Concerns over escalating Middle East tensions and persistent inflationary pressures are driving a downturn in US equity futures. The possibility of US military intervention in the conflict between Israel and Iran is fueling a risk-off sentiment among investors, leading to significant selling pressure.

Dow Jones futures experienced a decline of 0.35%, nearing the 42,000 mark during Thursday's European trading hours. Simultaneously, S&P 500 futures dropped approximately 25 points, settling near 5,955. This downward trend reflects investor apprehension surrounding the potential for wider conflict in the region.

Adding to the market's unease, a Bloomberg report indicated that senior US officials are actively preparing for a potential strike on Iran in the coming days. President Trump, while remaining non-committal on the matter publicly stating, "I may do it. I may not do it," reiterated his firm stance against Iran developing nuclear weapons. This uncertainty further contributed to the negative sentiment impacting futures trading.

The strengthening US dollar, evidenced by the US Dollar Index (DXY) nearing 99.00, underscores the safe-haven demand amidst geopolitical instability. Investors are seeking the relative security of the dollar amid the heightened uncertainty.

Further dampening market sentiment, the Federal Reserve's decision to maintain interest rates at 4.25%-4.50% while acknowledging the potential for increased inflationary pressures due to President Trump's tariff policies added to the downward pressure on US equity futures. This combination of geopolitical risk and economic uncertainty created a perfect storm for negative market movement. Note that US equity markets remained closed on Thursday in observance of Juneteenth. The confluence of these factors paints a bleak picture for short-term market performance.