Markets Rise on Iran Deal Hopes Amid US Strikes

Stock futures rose Tuesday as investors parsed conflicting signals from U.S. negotiations with Iran and renewed military action in the region. Dow Jones Industrial Average futures gained 305 points, or 0.6 percent, while S&P 500 futures advanced 0.7 percent and Nasdaq-100 futures climbed 1 percent. U.S. markets had been closed the prior day for Memorial Day.

President Donald Trump described talks aimed at extending a ceasefire and reopening the Strait of Hormuz as proceeding well, though he noted that offensive options remained available if diplomacy failed. Hours later, U.S. forces carried out strikes on missile sites and vessels in southern Iran that American officials described as defensive measures during the existing pause in fighting. The Islamic Revolutionary Guard Corps responded with fire toward U.S. aircraft and drones.

These developments produced uneven effects across asset classes. Brent crude futures rose above 98 dollars a barrel, while West Texas Intermediate futures fell roughly 4 percent. European equity indexes gave back some recent gains, with the STOXX 600 down 0.2 percent at midday. In contrast, South Korean shares reached a record close above 8,000 on the KOSPI, lifted by expectations that reduced tensions could ease energy costs and support export-oriented industries.

Market participants appeared to assign higher probability to an eventual agreement than to immediate escalation, even as strikes continued. Analysts noted that the week-long rally in major indexes had already incorporated some relief from earlier fears of sustained disruption to Middle East energy flows. The recent decline in oil prices contributed to that improvement, though volatility persisted as each new report revised the odds of de-escalation.

Skepticism remained evident in trading patterns. Foreign investors sold South Korean equities on net while local institutions bought, suggesting caution about whether diplomatic language would translate into durable access through the Strait. In the United States, futures pointed higher despite the strikes, indicating that participants viewed the military moves as limited rather than the start of broader conflict. Such pricing reflects the market's ongoing assessment of incentives on both sides, where the costs of prolonged confrontation weigh against any political advantages from continued pressure.

The episode illustrates how quickly asset prices adjust to new information about supply risks and policy intentions. Sustained stability in energy markets would lower input costs for manufacturers and transportation, yet repeated shifts between talks and strikes have kept uncertainty elevated. Investors will continue to monitor whether the current round of diplomacy produces verifiable steps or merely another round of mixed signals.