Dow futures slip, with investors eyeing ongoing violence in the Middle East. Hopes remain for a truce in an exchange of airstrikes between Israel and Iran, with the White House reportedly discussing the possibility of holding talks with Tehran. U.S. President Donald Trump leaves a Group of Seven summit in Canada, but says the departure has “nothing to do” with a possible ceasefire. Elsewhere, the Bank of Japan says it will slow the pace at which it is reducing its monthly bond purchases from the next fiscal year.

U.S. stock futures fell on Tuesday, as investors gauged a fifth day of fighting between Iran and Israel, looked ahead to U.S. retail sales data later in the session, and assessed a fresh bond tapering decision from the Bank of Japan. The Dow futures contract had slid by 330 points, or 0.8%, S&P 500 futures had dropped by 44 points, or 0.7%, and Nasdaq 100 futures had declined by 157 points, or 0.7%. The main averages on Wall Street ended higher on Monday, with analysts noting some moderation in worries over the impact of several days of airstrikes between Israel and Iran.

Comments from Trump at the Group of Seven summit in Canada also bolstered hopes that Washington could soon roll out new trade deals. Trump suggested that an agreement with Canada — a frequent target of his trade-related ire — was possible, although he stressed that tariffs would still be involved. Canada, a major exporter of steel and aluminum to the United States, now faces U.S. levies on these metals, but Prime Minister Mark Carney said that the two countries could have a fresh economic and security deal wrapped up within 30 days. Meanwhile, Trump signed a deal with the United Kingdom that formally lowers some import tariffs, yet steel and aluminum duties remained a key sticking point.

Israel’s military said on Tuesday that it had carried out “several extensive strikes” on military targets in western Iran, including on surface-to-surface missile storage sites and launch infrastructure. A senior Iranian general “in the heart of Tehran” was also killed overnight, Israel’s Air Force claimed. Iran has not yet confirmed the statement. The Trump administration is discussing with Iran the possibility of holding talks this week on a potential nuclear deal and an end to the conflict with Israel, Axios has reported. U.S. envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi could meet as part of the proposed talks, Axios reported, citing four sources briefed on the matter.

While the meeting is yet to be finalized, it represents a renewed effort by Trump to lower hostilities between the two Middle Eastern powers and bring the focus back towards a nuclear deal. Separate media reports have said that Iran has agreed to enter into negotiations only if Israel stops its bombing campaign. Trump’s remarks about Iran have been hawkish, with the president stating that “everyone should immediately evacuate Tehran” and chiding Iran for not accepting an earlier nuclear deal. Trump has also repeatedly stated that Iran will not be allowed to enrich any uranium, despite Tehran’s claims that it has no plans to develop nuclear weaponry.

Oil prices edged up on Tuesday. Gold, a typical safe-haven destination during times of geopolitical or economic uncertainty, was steady.

Trump has departed the G7 gathering in Canada early amid the hostilities between Israel and Iran, but he denied that his exit had anything to do with discussions over a potential ceasefire. French President Emmanuel Macron had stated that Trump had told G7 leaders that talks were happening over a possible halt to the conflict. In a social media post, Trump said the departure had “nothing to do with a CeaseFire,” adding that it was instead related to something “much bigger than that.” He did not elaborate further. Prior to Trump’s exit, the G7 nations had issued a statement calling for an easing to the conflict, but placed their support behind Israel and described Iran as a source of instability in the Middle East.

U.S. retail sales are set to highlight the economic calendar on Tuesday, with investors keen to see if Trump’s trade agenda is denting consumer demand. Economists expect retail sales to decline by 0.5% month-over-month in May, following growth of 0.1% in April. Despite ongoing anxiety over Trump’s aggressive tariffs, U.S. consumer sentiment improved for the first time in six months in June thanks to hopes for a trade détente between the U.S. and China, a survey from the University of Michigan showed last week. But analysts flagged that, if geopolitical tensions cloud over sentiment and threaten to lead to a sustained jump in oil prices, the improvement could be short-lived.

The Bank of Japan left interest rates unchanged as widely expected on Tuesday, and stated that it will reduce the pace at which it is tapering its monthly bond purchases from the next fiscal year. The BOJ left its benchmark policy rate at 0.5% for a third consecutive meeting after a 25 basis point hike in January. Starting from April 2026, the BOJ said it will cut its bond purchases by about 200 billion yen per quarter, compared to its current pace of 400 billion yen per quarter. The move is likely aimed at reducing market disruptions while also maintaining sufficient support for the Japanese economy, which is grappling with increased headwinds from steep U.S. trade tariffs. Along with the BOJ, a host of central banks are due to unveil their latest policy decisions this week, including the Federal Reserve on Wednesday.