Uncertainty About Middle East War May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction in early trading following the rally seen over the two previous sessions.

Traders may be reluctant to make significant moves following the two-day surge, which lifted the Nasdaq and the S&P 500 to their best closing levels in over two months.

Uncertainty about the conflict in the Middle East may also keep some traders on the sidelines as they await additional details about another round of peace talks between the U.S. and Iran.

In an interview with Fox Business, President Donald Trump expressed confidence the war is “very close to over” and reiterated his claim that Iran wants to make a deal “very badly.”

Trump also predicted that the “stock market is going to boom” when the conflict between the U.S., Israel and Iran is finally over.

Despite the recent advance by stocks, Russ Mould, investment director at AJ Bell noted “there remains considerable uncertainty over a successful outcome from peace negotiations.”

Stocks moved sharply higher during trading on Tuesday, extending the strong upward move seen over the course of Monday’s session. The major averages all moved to the upside, with the tech-heavy Nasdaq leading the charge.

The major averages ended the day at or near their highs of the session. The Nasdaq surged 455.35 points or 2 percent to 23,639.08, the S&P 500 jumped 81.14 points or 1.2 percent to 6,967.38 and the Dow climbed 317.74 points or 0.7 percent to 48,535.99.

With the extended rally, the Nasdaq and the S&P 500 reached their best closing levels in over two months, while the Dow hit a one-month closing high.

The continued strength on Wall Street came amid optimism about a second round of talks between the U.S. and Iran over ending the Middle East conflict.

President Donald Trump said on Monday the U.S. has been contacted by Iran about resuming peace talks and claimed, “They’d like to make a deal very badly.”

In a subsequent interview with the New York Post, Trump indicated the second round of U.S.-Iran talks “could be happening over next two days.”

The news about potential negotiations has contributed to a sharp pullback by the price of crude oil, with U.S. crude oil futures plunging by 7 percent.

“Previously, the narrative was straightforward: the longer the war dragged on, the worse the outlook for growth, inflation and risk assets,” said Daniela Hathorn, Senior Market Analyst at Capital.com. “Now, the dynamic appears to have flipped.”

“With a ceasefire framework still loosely in place and the US attempting to control the Strait, the absence of escalation, rather than the presence of conflict, is being treated as a positive signal,” she added. “In other words, each day without a major disruption to Gulf energy infrastructure is being read as incremental progress toward stabilization.”

Adding to the positive sentiment on Wall Street, a report released by the Labor Department showed producer prices in the U.S. increased by much less than expected in the month of March.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in March, matching a downwardly revised increase in February.

Economists had expected producer prices to jump by 1.2 percent compared to the 0.7 percent advance originally reported for the previous month.

The report also said the annual rate of growth by producer prices accelerated to 4.0 percent in March from 3.4 percent in February. Economists had expected the pace of growth to surge to 4.6 percent.

Airline stocks showed a substantial move to the upside on the day, with the NYSE Arca Airline Index soaring by 5.1 percent.

Significant strength was also visible among brokerage stocks, as reflected by the 2.4 percent gain posted by the NYSE Arca Broker/Dealer Index.

Biotechnology, retail and semiconductor stocks also saw considerable strength, while energy stocks moved sharply lower along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are rising $0.30 to $91.58 a barrel after plummeting $7.80 to $91.28 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,834.20, down $15.90 compared to the previous session’s close of $4,850.10. On Tuesday, gold jumped $82.70.

On the currency front, the U.S. dollar is trading at 159.11 yen compared to the 158.77 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1780 compared to yesterday’s $1.1795.

Asia

Asian stocks followed Wall Street higher to hit a six-week high on Wednesday amid optimism over renewed U.S.-Iran talks.

U.S. President Donald Trump told Fox News that he views the war as very close to being over. Media reports suggested negotiating teams from the U.S. and Iran could return to Pakistan later this week or early next week to resume talks to end the conflict in the Middle East.

The U.S. dollar lingered near six-week lows in Asian trading amid prevailing optimism around the ceasefire and a possible resolution.

Gold edged lower but held above $4,800 an ounce after climbing nearly 2 percent in the previous session on easing fears of an energy-led inflation shock and hopes for a potential peace agreement between the United States and Iran in the coming days.

Brent crude prices held steady above $95 a barrel after plunging 4.6 percent in the previous session following a warning from the International Energy Agency that high oil prices could lead to a fall in global demand.

China’s Shanghai Composite Index finished marginally higher at 4,027.21, paring early gains. Hong Kong’s Hang Seng Index gained 0.3 percent to close at 25,947.32 after China-based technology firm Huaqin launched a Hong Kong share sale to raise about US$581 million.

Japanese markets closed higher as the yen traded below 159 per dollar and data showed core machinery orders increased 13.6 percent month-over-month in February.

The Nikkei 225 Index rose 0.4 percent to 58,134.24, while the broader Topix Index settled 0.4 percent higher at 3,770.33. Tech stocks led the charge, with Advantest rising 2.2 percent and SoftBank climbing 4.8 percent on optimism over AI demand.

Seoul stocks rallied after data showed South Korea’s export price growth rose to 28.7 percent year-on-year in March, up from 10.7 percent in the previous period.

The Kospi surged 2.1 percent to 6,091.39, ending above 6,000 points for the first time after the outbreak of the U.S.-Iran conflict in late February. Samsung Electronics, SK Hynix and Hyundai Motors surged 2-3 percent.

Australian markets ended off their day’s highs as energy stocks declined, offsetting gains among miners and gold stocks. The benchmark S&P/ASX 200 Index finished marginally higher at 8,978.70, while the broader All Ordinaries Index closed up 0.2 percent at 9,181.10.

Virgin Australia shares soared 7.2 percent after the airline said it has adjusted airfares and capacity for the second half to offset higher jet fuel costs.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended up 0.5 percent at 13,076.58, snapping a three-session losing streak.

Europe

European stocks have struggled for direction on Wednesday as investors weigh mixed earnings results and braced for a new round of in-person talks between the United States and Iran expected to be held as early as this weekend.

The United States has reportedly set out two new conditions before restarting negotiations. Washington wants full and unrestricted reopening of the Strait of Hormuz, Israel Hayom reported, adding the Americans are sticking to a position of reciprocity.

In economic news, French harmonized consumer price inflation accelerated slightly more than initially estimated in March, final data from the statistical office INSEE revealed.

EU harmonized inflation hit 2 percent in March, which was up from the initial estimate of 1.9 percent and exceeded the 1.1 percent rise in February.

At the same time, consumer price inflation rose to 1.7 percent, as previously estimated, from 0.9 percent in February. This was the sharpest rise since August 2024.

Separately, Eurostat revealed in a report that Eurozone industrial production increased by 0.4 percent in February, compared to the month prior.

While the French CAC 40 Index is down by 0.6 percent, the U.K.’s FTSE 100 Index is just above the unchanged line and the German DAX Index is up by 0.1 percent.

French luxury goods company Hermes International slumped 10 percent after reporting a slowdown in sales growth for the first quarter.

Stellantis rallied 3.4 percent. The Franco-Italian automaker reported a 12 percent rise in global shipments in the first quarter.

Dutch chipmaking equipment giant ASML gained 1.7 percent. The company raised its 2026 sales guidance after beating first-quarter revenue and profit expectations.

Financial group Aegon fell nearly 2 percent after it agreed to sell its U.K. operations to Standard Life in a transaction valued at GBP 2 billion.

Rank Group surged 11 percent in London. The gambling operator raised its full-year underlying operating profit guidance after reporting a 5 percent year-on-year increase in fiscal Q3 2025-26 net gaming revenue.

Antofagasta jumped 3.2 percent. After posting a drop in Q1 copper production, the miner said it expects output to rise steadily through the remainder of the year.

U.S. Economic News

Import prices in the U.S. grew by much less than expected in the month of March, according to a report released by the Labor Department on Wednesday.

The Labor Department said import prices climbed by 0.8 percent in March after increasing by a downwardly revised 0.9 percent in February.

Economists had expected import prices to surge by 2.0 percent compared to the 1.3 percent jump originally reported for the previous month.

Meanwhile, the report said export prices shot up by 1.6 percent in March after surging by an upwardly revised 1.9 percent in February.

Economists had expected export prices to jump by 1.5 percent, matching the increase originally reported for the previous month.

A separate report released by the Federal Reserve Bank of New York on Wednesday unexpectedly showed a moderate increase in New York manufacturing activity in the month of April.

The New York Fed said its general business conditions index jumped to a positive 11.0 in April from a negative 0.2 in March, with a positive reading indicating growth. Economists had expected the index to dip to a negative 2.0.

Looking ahead, the New York Fed said firms still expect conditions to improve in the months ahead, although the index for future business conditions slumped to 19.6 in April from 31.0 in March, suggesting firms were less optimistic about the outlook.

At 10 am ET, the National Association of Home Builders is due to release its report on homebuilder confidence in the month of April. The housing market index is expected to edge down to 37 in April after inching up to 38 in March.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended April 10th at 10:30 am ET. Crude oil inventories are expected to inch up by 0.2 million barrels.

At 1:45 pm ET, Federal Reserve Vice Chair Michelle Bowman is due to participate in a conversation on “Banking Regulation” at the Institute of International Finance Global Outlook Forum.

The Federal Reserve is scheduled to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, at 2 pm ET.