U.S. stock futures were modestly lower after Wall Street posted solid gains a day earlier amid hopes that a recent interim peace arrangement between the United States and Iran might persist. Oil markets continued a downward trajectory as traders increasingly priced in the possibility that disrupted shipments could resume if the Strait of Hormuz reopens under the terms of the agreement. Yet the unexpected cancellation of a scheduled round of U.S.-Iran nuclear talks has cast doubt on the stability of the ceasefire.
Holiday and market backdrop
U.S. exchanges were set to be closed on Friday for the Juneteenth holiday after a rally in the prior session that followed the signing of a memorandum of understanding intended to halt recent hostilities between Washington and Tehran. The rebound came after equities had slid on Wednesday in response to a Federal Reserve interest rate announcement that suggested a potentially firmer policy stance.
Benchmarks rose across the board in the session before the holiday: the S&P 500 climbed 1.1%, the Dow Jones Industrial Average rose 0.1%, and the Nasdaq Composite jumped 1.9%. Semiconductor stocks were among the leading contributors to the advance after comments that Apple had agreed to work with Intel to develop chips in the United States bolstered sentiment around the chip sector.
Laurence Booth, Global Head of Markets at CMC Markets, cautioned that recent gains have been underpinned by expectations of de-escalation but warned the stalled negotiations show the underlying issues remain unresolved. He suggested markets could be exposed to a deterioration in sentiment heading into the following week.
U.S.-Iran negotiations called off
Fresh discussions between U.S. and Iranian officials, planned to take place in Switzerland, were unexpectedly cancelled after U.S. Vice President JD Vance withdrew from the meeting. The talks were expected to focus on Iran's nuclear program and were to build on a memorandum of understanding that the two countries signed as part of the ceasefire.
Iranian state media reported that Tehran wants clearer proof that Washington is honoring the terms of the agreement before agreeing to further negotiations. While the cancelled session does not in itself indicate that the interim peace deal has collapsed, it underscores that tensions remain unresolved and leaves open the prospect of renewed friction.
Analysts and market participants remain attentive to the possibility that a resumption of hostilities could weigh on energy supplies, revive inflationary pressures, and prompt volatility across global markets.
Oil on track for steepest weekly fall in months
In London trade on Friday, oil prices extended their retreat. Brent crude futures fell 1.1% to $79.01 per barrel, while U.S. West Texas Intermediate slipped 0.7% to $76.05 per barrel. Both benchmarks were on course to post declines of nearly 10% for the week and were trading close to their lowest levels since early March, the period when the U.S.-Iran conflict initially escalated.
A central provision of the U.S.-Iran agreement calls for the gradual reopening of the Strait of Hormuz, a key maritime chokepoint that handles roughly a fifth of the world's oil and liquefied natural gas. The potential reopening of that waterway has underpinned expectations of a meaningful increase in global crude flows, helping to pressure prices downward.
ASML draws U.S. concern over possible machine in China
Shares of Dutch semiconductor equipment maker ASML fell in early European trading after U.S. officials reportedly raised concerns that one of ASML's most advanced lithography machines may be operating in China. Bloomberg reported that U.S. Commerce Secretary Howard Lutnick told ASML executives Washington was worried an extreme ultraviolet, or EUV, system could be located in China despite export controls.
ASML rejected that assertion, saying it has never shipped an EUV system to China and that none of the machines are present there. The episode highlights the continuing tensions between the United States and China over access to advanced semiconductor production tools, and the scrutiny underscores the sensitivity of high-end chipmaking equipment in geopolitical terms.
Pentagon funding request
According to a Wall Street Journal report, the U.S. Department of Defense needs roughly $80 billion to cover costs related to the Iran conflict and other priorities. The newspaper said Deputy Defense Secretary Stephen Feinberg notified lawmakers of the requirement during calls this week. The report noted that a broader supplemental spending request could be sent to Congress in the coming days and might also include funds for farm programs and disaster relief.
While any such supplemental proposal would still need congressional approval, investors will be watching closely because large spending packages can affect federal deficits, Treasury borrowing, and expectations for interest rates.
Conclusion
Markets entered the holiday weekend with mixed signals: recent risk-on momentum in equities tied to hopes of de-escalation, contrasted with renewed diplomatic uncertainty after the cancellation of planned talks. Energy markets have reacted to expectations that access through the Strait of Hormuz could broaden crude supplies, driving prices lower, while geopolitical and policy developments continue to influence investor calculations across sectors from semiconductors to defense contractors and broader fixed income markets.