Dow Jones futures fall as US–Iran tensions renew

Dow Jones futures decline 0.62% below 49,350, with S&P 500 and Nasdaq 100 futures also falling 0.49% and 0.47% to near 7,120 and 26,700, respectively, during European hours on Monday ahead of the United States (US) regular opening.

US stock futures fell amid increased risk aversion due to renewed US–Iran tensions. Iranian state media, the Islamic Republic News Agency (IRNA), reported that Tehran has refused to resume talks with US officials, citing “unrealistic expectations,” among other concerns. Iran has blocked the Strait of Hormuz, reversing a brief reopening after Trump refused to lift port blockades.

US President Trump confirmed on Truth Social that US representatives will travel to Islamabad for negotiations with Iran on Monday. However, he also criticized Tehran’s move to re-close the Strait and reiterated threats to target Iranian infrastructure, including power plants and bridges.

Market sentiment turns sour on fading expectations of Federal Reserve (Fed) rate cuts, driven by persistent inflation concerns linked to elevated energy prices amid Middle East tensions. Last week, the Dow Jones gained 3.19% for its third consecutive weekly gain, while the S&P 500 and Nasdaq 100 rallied 4.54% and 6.84%, respectively, with both benchmarks reaching fresh record highs.

Fed Governor Christopher Waller said Friday that the job market’s break-even rate is likely near zero, adding that a prolonged Middle East conflict could heighten both inflation and employment risks. Meanwhile, San Francisco Fed President Mary Daly noted she is assessing whether rising oil prices are feeding into broader goods and services inflation.