S&P 500 broad market index futures are
trading neutrally near the 5,976 level, showing resilience despite a dramatic
escalation in the Middle East over the weekend. In the early hours of Sunday,
the United States launched a strike against Iranian nuclear sites, marking a
significant turning point in the conflict. President Donald Trump’s decision
has effectively pulled the U.S. into another war, yet Washington has attempted
to calm market fears by insisting the strike was a one-off event and not the
beginning of a full-scale military campaign. Officials also stressed that
regime change in Tehran is not a goal, helping to contain immediate
geopolitical fallout.
Oil prices spiked to $80.56 per barrel of Brent
crude at the Monday open but quickly retreated to $77.10. The S&P 500
initially dropped by 1.0% to 5,915 points in early trading but recovered by
midday, reflecting cautious investor optimism that the situation may not spiral
further. However, this fragile stability could be short-lived. Iran has not yet
responded directly to the U.S. attack, instead continuing missile strikes on
Israel. More concerning, on Sunday, Iran’s parliament approved a proposal to
close the Strait of Hormuz—a key global oil transit route—pending final
approval by the Supreme National Security Council chaired by Ayatollah Ali
Khamenei.
The potential consequences of such a move are
severe. U.S. banks estimate that a partial closure of the Strait could drive
Brent crude prices to $100–110 per barrel, while a sustained month-long
blockade could see levels surge to $120–150. The first scenario alone could
trigger a recession in both the U.S. and global economies; the second would
likely lead to a full-blown crisis. The U.S. has urged China to intervene
diplomatically with Iran to avoid such outcomes, but both Beijing and Tehran
have maintained a low profile, making it difficult to predict the next steps.
For now, markets are not pricing in the worst-case scenario, preferring to
focus on present facts rather than speculation.
On the macroeconomic front, attention will
turn to the U.S. Purchasing Managers’ Index (PMI) data on Monday, where a
seasonal slowdown for June is anticipated. Federal Reserve Chair Jerome Powell
will testify before Congress on Tuesday and Wednesday. In the current
environment of rising oil prices, Powell is expected to reiterate the risks of
inflation linked to tariffs and may also address the impact of geopolitical
tensions. Any explicit link between inflation and the conflict could increase
market volatility and exert additional selling pressure on equities.
To avoid slipping into
a bearish technical pattern — confirmed by a break below 5,950 points — the
S&P 500 needs to rebound to at least 6,000 points. This
would offer some cushion against sharper declines. Compounding the situation is
the anticipated release of the Fed’s preferred inflation measure, the Personal
Consumption Expenditures (PCE) index, on Friday. Expectations are for a rise to 2.6% YoY,
which could further support a cautious Fed stance.
Investor sentiment is already deteriorating. Last week, the SPDR S&P 500 ETF Trust (SPY)
reported net outflows of $8.43 billion, a significant figure for June. With the threat of a Hormuz Strait closure looming, it’s unlikely that
institutional investors will return to buying anytime soon.
The technical picture for the S&P 500
remains unchanged. Futures
continue to trade within an uptrend channel and have already hit the primary
target zone of 5,950–6,050 points. As long as the index holds above 5,950—currently at 5,973—the
probability of another attempt to retake the 6,050 resistance remains intact. A
confirmed breakout above that level would initiate a scenario targeting the
extreme upside zone of 6,300–6,400 points. However, failure to maintain support
would open the door to a pullback toward 5,840–5,860 and potentially flip the
trend to bearish.
Oil markets remain highly fragile. Brent crude
broke above resistance at $67.00–69.00 and surged to test the next zone at
$76.00–78.00. A critical battle is now underway to break this resistance. A
confirmed move higher would target $86.00–88.00, but with the U.S. now directly
involved in the Israel–Iran conflict, such a breakout could accelerate toward
even higher levels. Traders are clearly positioning themselves aggressively
around the current price zone.
Gold initially surged on Monday to $3,394 per
troy ounce but quickly reversed course. The yellow metal failed to test resistance at $3,430–3,450
and dropped back to the support range of $3,330–3,350 per ounce. Current prices hover around $3,368. The risk of further decline remains
high, with a break below $3,330 likely to confirm a move down to the
$3,030–3,050 area. Despite the geopolitical backdrop, gold has not yet signaled
a sustainable breakout.
In currency markets, the U.S. Dollar is
regaining strength. The EURUSD pair,
which had been trading within its primary uptrend range near 1.15500, dropping
sharply following the U.S. military strike, nearing the 1.14500 level. A break below this support would invalidate the bullish outlook and
activate a bearish scenario with a primary downside target of 1.12000–1.13000.