Summary
Gold firms, dollar softens amid reports of momentum in U.S.-Iran peace talks
Investing.com - Futures linked to the main U.S. indices inch up, while oil prices dip, with optimism surrounding reports of potential forward momentum in talks to permanently end the Iran war. But a U.S. blockade of Iranian ports extends into a second day, further crimping oil shipping through the vital Strait of Hormuz waterway. A flood of big-name U.S. bank earnings is in focus, while luxury titan LVMH notes an impact to sales from the conflict in the Middle East.
1. Futures tick up
U.S. stock futures pointed higher on Tuesday, bolstered by hopes for progress in negotiations between the U.S. and Iran, while investors were also gearing up for a slew of major bank earnings.
By 03:17 ET (07:17 GMT), the Dow futures contract had inched up by 51 points, or 0.1%, S&P 500 futures had gained 10 points, or 0.1%, and Nasdaq 100 futures had risen by 72 points, or 0.3%.
The main averages on Wall Street advanced in the prior session, as initial disappointment that a weekend round of talks between Washington and Iran did not yield an immediate agreement faded. U.S. President Donald Trump also said the White House had been contacted by Iranian officials who wanted to "make a deal," adding that Iran will not have a nuclear weapon.
"[W]hile the meeting was certainly disappointing, it was hardly catastrophic, and if one looks closely, Trump seems to be pivoting aggressively away from kinetic escalation," analysts at Vital Knowledge said in a note.
They said their view of the conflict is "relatively sanguine," although the "economic fallout from what’s already occurred" could be "significant."
At the same time, a U.S. blockade of Iranian ports came into effect on Monday, potentially further restricting already shuttered oil flows through the Strait of Hormuz. The International Energy Agency has warned that oil prices, which have fallen but remain well above levels before the start of the joint U.S.-Israeli assault on Iran in late February, may not yet be factoring in the severity of the supply shock.
2. U.S. blockade enters second day
Tehran has hit out at the U.S. blockade, which media reports said has been supported by 15 American warships, as an "act of piracy."
British maritime officials noted that access has been restricted for vessels attempting to enter or depart Iranian ports, as well as in coastal areas in the Persian Gulf, Gulf of Oman and sections of Arabian Sea.
Yet diplomatic efforts have appeared to gain some traction. The U.S. and Iran have continued to engaged with one another and there has been some forward motion toward a permanent ceasefire deal, Reuters reported.
Pakistan, which has emerged as a key mediator between the U.S. and Iran, has also offered to host a second round of discussions prior to the end of the ongoing two-week ceasefire, according to reports. The first talks were held in Islamabad last weekend.
Elsewhere, Israel and Lebanon are due to begin direct peace talks in Washington on Tuesday. Air attacks by Israel on Iran-aligned Hezbollah targets in Lebanon have been a key sticking point threatening the fragile halt to hostilities between the U.S. and Iran.
3. Oil slips
But the prospect of at least some progress toward a lasting peace, and the lifting of restrictions on travel through the Strait of Hormuz, was enough to push oil prices back down below $100 a barrel.
Brent crude futures, the global benchmark, had fallen by 1.5% to $97.88 a barrel, while U.S. West Texas Intermediate crude futures declined by 3.4% to $95.78 a barrel.
The outlook for crude is murky. In its first assessment of the impact of the Iran war released on Monday, OPEC slashed its forecast for world oil demand in the second quarter by 500,000 barrels per day.
However, the decline was less than other projections, and OPEC made no change to its full-year outlook, suggesting that the producer group expects oil consumption to rebound later in 2026.
4. Bank earnings flood ahead
Attention now turns to the earnings calendar, with a slew of Wall Street lending giants are scheduled to report on Tuesday.
JPMorgan Chase, Wells Fargo, and Citigroup are set to unveil quarterly returns before the start of U.S. trading, followed by peers Bank of America and Morgan Stanley on Wednesday.
Analysts have been anticipating that results from these banks will be aided by solid trading activity and investment banking fees, even as the specter of economic uncertainty caused by the Iran war lingers.
JPMorgan CEO Jamie Dimon warned earlier this month that the conflict risks sparking oil and commodity prices shocks that could keep inflation elevated and drive interest rates higher than current market estimates.
On Monday, Goldman Sachs reported a 19% jump in first-quarter profit, thanks to volatile markets which underpinned a record three-month period at its trading and banking units.
5. LVMH flags Iran war impact
In Europe, shares of LVMH sank in early dealmaking after the Dior parent flagged that the conflict in the Middle East has trimmed at least 1% from total group sales, denting optimism that the $400 billion luxury sector may be able to continue a nascent recovery.
Global quarterly sales at LVMH, the group behind high-end brands like Louis Vuitton and Bulgari jewellery, rose by 1%, missing estimates for an increase of 1.5%, according to Visible Alpha estimates cited by Reuters.
LVMH’s finance chief Cecile Cabanis warned that "[w]hat we see today is still that demand is very much down" since disruption to shopping activity in the Middle East following the outbreak of the Iran war.
Peer Kering, the owner of the Gucci label, is now set to report after the close of European markets on Tuesday.