Dow Futures remain positioned close to the neutral line. Comments from U.S. President Donald Trump have rekindled speculation regarding a possible peace agreement with Iran, although levels remain significantly elevated compared to pre-war figures amid ongoing uncertainty surrounding the negotiations. In other developments, Blackstone has unveiled intentions to establish a new artificial intelligence cloud enterprise, while Japan’s economy demonstrates robust growth in the first quarter; however, challenges stemming from the Iran conflict are on the horizon.

Dow futures exhibited a lackluster performance on Tuesday, as market participants evaluated the resurgence of optimism surrounding a lasting peace agreement in the Middle East while anticipating significant earnings reports from the technology sector later this week. By 03:30, the market was largely stable, with futures declining by 6 points, or 0.1%, while another index decreased by 46 points, or 0.2%. In terms of earnings, market participants will be closely monitoring the results from DIY retailer Home Depot, which marks the beginning of a series of reports from consumer-oriented companies in the near future. However, the highlight of the week will be results from semiconductor giant Nvidia, which stand to offer a glimpse into the state of an artificial intelligence boom that has helped shield stock markets from the repercussions of the Iran war. The primary indices on Wall Street concluded the day with a mixed performance on Monday, as both the tech-centric Nasdaq Composite and the benchmark S&P 500 experienced declines. The leading performer was the blue-chip, which increased by 0.3%. In conjunction with profit-taking in technology equities, market sentiment was dampened by an increase in U.S. Treasury yields and persistently high oil prices.

However, a social media post from President Trump prompted the S&P 500 to recover significantly from its intra-day decline, according to analysts at Deutsche Bank in a note. Trump announced that he had decided against launching new attacks on Iran, responding to a request from several Gulf leaders. The president asserted that “serious negotiations are now taking place,” further noting that, “in the opinion” of the Gulf authorities, a “Deal will be made, which will be very acceptable to the United States of America, as well as all Countries in the Middle East, and beyond.” He added that the agreement will include “NO NUCLEAR WEAPONS FOR IRAN!” — although he indicated that he had ordered the U.S. military to remain prepared to launch a “full, large scale assault on Iran, on a moment’s notice” if an accord is not reached. The news contributed to the alleviation of some of the risk premium that had accumulated throughout the previous day,” the Deutsche Bank analysts stated. Iranian state media indicated that Tehran has put forth a new peace proposal to the U.S., aimed at ceasing hostilities across all fronts, facilitating the withdrawal of U.S. forces from regions adjacent to Iran, and seeking reparations for damages incurred due to American and Israeli actions.

The global oil benchmark was last trading down by 1.8% at $110.07 a barrel. Prior to the commencement of the coordinated U.S. and Israeli offensive against Iran in late February, the contract was trading at approximately $70 per barrel. Concerns have proliferated regarding the potential for an energy shock to trigger a surge in global inflation, subsequently prompting a series of interest rate increases by central banks. Nonetheless, the decrease in oil prices has facilitated a stabilization of global bonds following a significant sell-off in recent days. Yields on the benchmark declined from a peak not seen in over a year, while the rate-sensitive segment also experienced a slight decrease. Yields across the Eurozone, encompassing Germany, France, Spain, and Italy, experienced a decline as well. Bond prices generally exhibit an inverse relationship with yields. “While near-term yield volatility may keep markets on edge, current attractive yields and growth risks point to an appealing risk-return profile for short- and medium-maturity quality bonds,” analysts noted.

Alphabet’s Google announced plans to establish a new AI cloud company utilizing its specialized chips. Blackstone will invest $5 billion in the company and will hold the majority ownership of the venture, as stated by the two companies. The initiative is designed to introduce 500 megawatts of computing capacity by 2027, as stated by the companies, with a focus on significantly enhancing capacity in the long term. The venture is poised to compete with AI compute providers like CoreWeave, while simultaneously amplifying Google’s efforts to develop and monetize its proprietary AI computing chips, thereby introducing potential competition for Nvidia.

Japan’s economy demonstrated a more robust expansion than anticipated in the first quarter, bolstered by heightened private consumption and exports. This development strengthens the outlook that the Bank of Japan may persist in its gradual normalization of monetary policy, even in the face of increasing global uncertainties. Preliminary government data released on Tuesday indicated that gross domestic product increased at an annualized rate of 2.1% in the January-March quarter, surpassing market expectations of 1.7% growth and marking an acceleration from a revised 0.8% expansion in the preceding quarter. The economy experienced a quarter-on-quarter growth of 0.5%, surpassing expectations of a 0.4% increase and outpacing the previous quarter’s growth of 0.2%. However, analysts cautioned that the ramifications of the Iran war, which has constrained essential energy supplies to various Asian nations, including Japan, may soon be more acutely experienced. Analysts noted that Japan’s economy entered the Iran war with robust momentum; however, they anticipate that GDP growth will come to a standstill in the current and following quarter. Anticipating future developments, the government’s choice to impose a cap on petroleum product prices suggests that inflation is likely to stay contained in the near term. However, that situation is unlikely to persist, as elevated energy prices are driving up the costs of imported goods, which will subsequently lead to increased utility bills in the near future.