Item 1 of 2 Visitors walk past screens showing the latest market data at the Japan Exchange Group’s Tokyo Stock Exchange in Tokyo, Japan April 6, 2026. REUTERS/Issei Kato
Markets have been jittery since the US-Israel war broke out at the end of February, when Tehran effectively closed the Strait of Hormuz, a key global oil transit point that sparked inflation concerns.
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Although investors have placed their hopes on a solution to the conflict, the talks have so far produced no progress, and US President Donald Trump has set a deadline of Tuesday at 8pm Eastern Time (0000 GMT Wednesday) for an agreement to be reached.
That created a risk and cautious sentiment as the US dollar held on to its gains and rising oil prices.
Brent crude futures rose 1% to $111.53 a barrel, up more than 50% since the conflict began.
US stock futures fell 0.35%, while European futures pointed to a slight open after closing for the holiday on Friday and Monday.
“We’re back in the Trump era and there’s no way to predict with any confidence what’s going to happen,” said Kyle Rodda, senior market analyst at Capital.com.
“More bold traders may bet one way or the other. Others will look to hedge or stay outright. But there aren’t many market participants who can afford to do that but wait and see.”
Iran has said it wants a permanent end to the war, instead of a temporary ceasefire, and has pushed back against pressure to open the waterway, a conduit for a fifth of the world’s oil and natural gas supplies.
Trump warned Iran that it could be “taken” if it does not meet its deadline to make a deal, vowing to destroy Iran’s energy plants and bridges, allaying concerns that such actions would amount to war crimes.
“Any indication of threats to Iran’s energy infrastructure would represent a major escalation, which would increase the risk of retaliation that could damage Gulf energy infrastructure,” said Vasu Menon, chief investment strategist at Singapore’s OCBC.
DANGEROUS DANGERS
The conflict has fueled concerns about deflation – high inflation with weak or slow growth – raising expectations for global rates, and traders are not expecting any further rate cuts from the Federal Reserve this year.
Data on Monday showed growth in the US services sector slowed in March, while prices paid by businesses for materials rose the most in more than 13 years, a sign that the protracted war with Iran was adding to inflationary pressure.
US inflation data will be released on Friday which may highlight the extent of price pressure from rising energy prices but for now investors’ attention will be on the timing of Trump’s war and whether a deal will be agreed.
Financially, the euro was stable at $1.1538. The dollar index, which measures the US dollar against six other currencies, was at 100.03, near recent highs. The dollar has been the currency of choice among investors during the turmoil.
The Japanese yen last traded at 159.74 per US dollar, hovering near the key 160 level that traders have been eyeing to assess whether Tokyo could intervene after the latest strong sentiments from the authorities.
Gold prices fell 0.17% to $4,640 an ounce in early trade.
Reporting by Ankur Banerjee from Singapore; Edited by Sonali Paul and Raju Gopalakrishnan
Our standards: The Thomson Reuters Trust Principles.
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