US stock index futures staged a strong rebound during Monday evening trading, quickly reversing early losses, supported by reports that President Donald Trump is considering ending the confrontation with Iran without linking it to reopening the Strait of Hormuz.
This improvement followed a weak session on Wall Street, where pressure persisted due to escalating political tensions, along with declining performance in technology stocks amid concerns about chip demand and AI sector valuations.
In terms of numbers, S and P 500 futures rose about 0.9% to trade near 6446 points, while Nasdaq 100 futures gained 1% to around 23364 points, and Dow Jones futures added nearly 1% to approach 45902 points, signaling a partial return of risk appetite with any potential signs of de escalation.
On the other hand, reports indicated that the US administration is reassessing the course of operations, with a belief that reopening the Strait of Hormuz may take longer than initially expected. This has led to a focus on achieving specific military objectives related to weakening Iran’s naval and missile capabilities before transitioning to a gradual de escalation phase.
Washington is expected to later move through diplomatic channels to pressure Tehran to reopen the strait, involving allies in Europe and the Gulf in managing this file, especially given the importance of the strait through which about one fifth of global oil supplies pass.
On the ground, military movements suggest the possibility of continued escalation, given the lack of clear signs of de escalation, with ongoing exchanges of strikes and an expansion in the scope of operations, keeping markets in a constant state of anticipation for any shift in developments.
In actual markets, Wall Street ended Monday’s session mixed, with the S and P 500 falling 0.4% to 6343 points, Nasdaq declining about 0.7% to 20794 points, while the Dow Jones recorded a slight gain of 0.1% to close near 45216 points, reflecting continued caution despite some rebound attempts.
Regarding the US dollar, it is heading for its strongest monthly performance since July, supported by clear flows toward safer assets, amid the escalation of conflict in the Middle East which pushed oil prices to higher levels, while other assets faced noticeable pressure, leading to a repricing of recession risks across the global economy.
Despite reports about Washington’s willingness to end operations against Iran without enforcing the reopening of the Strait of Hormuz, the market reaction remained limited, as oil saw a slight decline during Asian trading, while the dollar maintained its strength with little change.
In currencies, the dollar continued to advance against the South Korean won to reach 1534, levels typically seen only during periods of severe financial stress. The euro remained below 1.15, while currencies such as the British pound and the Australian and New Zealand dollars hovered near multi month lows.
Meanwhile, potential intervention signals from Japanese authorities helped limit pressure on the yen, despite trading at its weakest levels since mid 2024. The dollar’s strength is supported by several factors, including rising US bond yields, the United States becoming a major energy exporter, and investors’ preference for holding liquidity during periods of uncertainty.
The dollar also continued to post strong gains against the Swiss franc, alongside breaking key technical levels against the Australian and New Zealand dollars, with the latter approaching critical support levels, while the British pound trades near 1.32 without clear signs of recovery.
Risks to this momentum remain, as upcoming US labor market data could represent a potential turning point, along with the possibility of shifts in the traditional relationship between equities and currencies, especially if markets begin to price in a longer and more complex conflict scenario.
At the same time, markets are awaiting Eurozone inflation data, which is expected to return above the European Central Bank target, potentially adding a new layer of pressure on monetary policy in the coming period.
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