US stock futures were largely flat as investors paused after a strong rally, awaiting the Federal Reserve's policy meeting and further details on the US-Iran peace deal. The Dow Jones Industrial Average futures nudged up 0.2%, S&P 500 futures were flat, and Nasdaq futures edged 0.1% lower. This cautious sentiment follows Monday's trading where the Dow advanced 0.92%, the S&P 500 climbed 1.65%, and the Nasdaq Composite surged 3.07% to new highs.
Optimism about the US-Iran peace agreement, set to be signed in Switzerland on Friday, continued to influence markets. The preliminary deal is expected to end the conflict and potentially lead to the reopening of the Strait of Hormuz. However, initial excitement tempered as markets sought more specific details, especially regarding Iran's nuclear program and the mechanics of the strait's reopening. Oil prices reflected this caution, with Brent crude futures sliding 0.3% to $82.90 a barrel and WTI futures slipping 0.3% to $80.52 a barrel, both down around 9% for the week, as expectations of the strait reopening unwound geopolitical risk premiums. Goldman Sachs lowered its fourth-quarter Brent crude forecast from $90 to $85 a barrel.
The Federal Reserve's first policy meeting under new chair Kevin Warsh was a key focus, with the central bank widely expected to keep interest rates unchanged. Investors were keen to hear Warsh's commentary on navigating an economy with above-target inflation, resilient growth, and strong AI-related investment demand. Meanwhile, Asian markets showed a mixed performance. The Bank of Japan raised its benchmark policy rate to 1%, a 31-year high, causing the yen to edge up 0.1% against the US dollar and the Nikkei 225 to jump 0.9% to a new all-time peak above 70,000 before settling slightly lower. South Korean shares rose 2.3%, but Hong Kong stocks weighed on regional benchmarks due to weaker Chinese retail sales and fixed-asset investment data.
The US dollar index held steady at 99.70, and the yield on the US 10-year Treasury bond was up 0.4 basis point at 4.471%. Gold moved 0.4% higher to $4,321.22 an ounce. European futures were slightly down, with pan-region futures off 0.1%, German DAX futures off 0.2%, and FTSE futures edging 0.1% lower, as traders braced for more clarity on the US-Iran deal and central bank policies.
