Dow Futures hover just above the neutral point, demonstrating resilience in the face of renewed hostilities between the U.S. and Iran. Expectations for a swift peace agreement diminish, notwithstanding a series of optimistic remarks made over the weekend. Oil prices are on the rise once more, remaining significantly elevated compared to pre-war levels, even as concerns mount regarding a potential inflationary surge driven by energy costs.

Dow futures indicated an upward trajectory on Tuesday, as traders resumed their activities following a holiday-shortened week, while evaluating the implications of recent U.S. military actions in Iran. By 03:42, the index had risen by 281 points, or 0.6%, the other index had climbed by 41 points, or 0.6%, and a third index had jumped by 220 points, or 0.8%. Analysts noted that the market appears inclined to persist in pricing de-escalation in the Middle East, despite occasional surgical strikes from the U.S. The primary indices on Wall Street were closed on Monday in observance of Memorial Day. U.S. stocks experienced an upward movement in the previous session on Friday, with the blue-chip index notably achieving a new record high close. Investors are closely monitoring swift advancements in the Middle East, alongside a robust set of quarterly corporate earnings and sustained excitement surrounding artificial intelligence.

The U.S. military executed what it characterised as “defensive” strikes in southern Iran, resulting in the sinking of two vessels belonging to the Islamic Revolutionary Guard Corps that were attempting to lay mines in the Strait of Hormuz. The attacks prompted a response from Tehran, which launched missiles at a U.S. drone and fighter jet. American attacks subsequently targeted missile launchers in proximity to Bandar Abbas, as reported by the Wall Street Journal, referencing a U.S. official. Recent optimism regarding a potential lasting agreement between Washington and Tehran to conclude their nearly three-month-old conflict has diminished. U.S. Secretary of State Marco Rubio indicated that negotiations regarding a deal with Iran might “take a few days,” while asserting that the Strait of Hormuz will ultimately be fully reopened “one way or the other. Over the weekend, news reports indicated that both parties had reached a preliminary agreement, while President Donald Trump subsequently remarked that discussions were advancing “nicely. However, Trump also cautioned that a resumption and escalation in hostilities could occur if an agreement is not achieved.

Oil prices increased, recovering some of the losses incurred on Monday due to reported advancements in negotiations between the U.S. and Iran regarding the reopening of the Strait of Hormuz. The global oil benchmark was last observed up by 2.4% at $98.39 a barrel, following a dip below $100 earlier this week. Brent continues to trade significantly above the pre-war benchmark of approximately $70 per barrel, thereby sustaining the potential for inflationary pressures driven by energy costs. Investors have concentrated their attention on the condition of the Strait of Hormuz, a crucial maritime route located off Iran’s southern coast, which facilitates the passage of one-fifth of the global oil supply. The strait has effectively been closed to tanker traffic following the joint military action by the U.S. and Israel against Iran in late February.

In light of these circumstances, the U.S. dollar has demonstrated strong support. Traders have gravitated towards the greenback, viewing it as a safe haven amid the crisis. This sentiment is bolstered by the belief that the American economy, being a significant energy exporter, may be somewhat insulated from the impacts of an oil price surge. The index, which tracks the currency against a basket of six of its peers, has climbed by 1.3% over the past three months. On Tuesday, it experienced a decline of 0.2%. Gold prices have been adversely affected in this environment. A stronger dollar can increase the cost of bullion for international purchasers, while inflationary pressures driven by energy costs may lead central banks to raise interest rates — a development that would likely be unfavourable for a non-yielding asset such as gold. At 04:09, spot gold experienced a decline of 0.8%, reaching a price of $4,533.55 per ounce.

Shares of Lenovo Group surged to a record high following the release of quarterly earnings that exceeded expectations, driven by strong demand for AI servers and a recovery in the personal computer market. Shares of Lenovo, listed in Hong Kong, experienced a notable increase, rising by 18% at one point to reach HK$18.7, marking their highest level to date. This surge follows a 20% rise on Friday, attributed to the company’s quarterly revenue report, which exceeded analyst expectations. The stock experienced an increase of 15.1%, closing at HK$18.13 on Tuesday. The company reported that revenue for the March quarter increased to $21.6 billion, while net profit experienced a remarkable surge of 479% to reach $521 million. Lenovo’s infrastructure solutions business, encompassing AI servers and data-center products, experienced a remarkable 37% revenue growth, establishing itself as the company’s fastest-growing segment in response to the surging demand for artificial intelligence computing. The core division encompassing PCs, tablets, and smartphones benefited from robust consumer demand and an increase in market share, occurring in anticipation of forthcoming price hikes associated with shortages in memory chips.