US Futures Drop as Trump Weighs Strikes on Iran: Markets Wrap

(Bloomberg) — Oil trimmed earlier gains and equity futures remained lower after White House press secretary Karoline Leavitt said President Trump will decide within two weeks whether to back Israel militarily in its conflict with Iran. The remarks offered some short-term clarity but did little to resolve broader uncertainty around potential US involvement and the risk of renewed energy-driven inflation.

 

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S&P 500 contracts slipped 0.9% in thin holiday trading. Europe’s Stoxx 600 dropped 0.8%, falling for a third straight session. Asian equities declined 1.4%, with losses concentrated in Japan and South Korea.

West Texas Intermediate rose 0.7% to $75.8 a barrel. Brent crude advanced past $78 a barrel, extending gains in a week where market reaction to the Middle East conflict has been most concentrated in oil. The dollar was little-changed against a basket of currencies, after paring earlier gains.

Traders’ sentiment turned more cautious following a Bloomberg report that senior US officials are preparing for a possible strike on Iran in the coming days. Markets were already on edge after the Federal Reserve downgraded its estimates for growth this year and projected higher inflation.

“If the US does strike, you’re going to see a big knee-jerk reaction,” said Neil Wilson, investor strategist at Saxo UK. “No one will be wanting to make big long bets.”

Israel struck more of Iran’s nuclear sites on Thursday and warned its attacks could bring down Tehran’s leadership as both sides awaited a decision from President Donald Trump on whether to join the offensive.

The odds for the US to become involved are “quite high at this moment in time,” said Anna Rosenberg, head of geopolitics at Amundi Investment Institute.

“For the US, this is a moment to take out a big geopolitical headache, which is Iran potentially developing a nuclear weapon,” Rosenberg told Bloomberg TV. “Having said that, acting comes with a lot of consequences too. Trump will have to make a really difficult decision.”

Among a flurry of monetary policy decisions in Europe, the Bank of England kept its benchmark rate on hold at 4.25%. While the outcome was in line with economists’ expectations, more committee members than anticipated had voted for a cut. The pound fell before erasing the loss.

Earlier, the Swiss National Bank cut its interest rate to zero as policymakers sought to deter investors from pushing up the franc, which has gained almost 10% against the dollar this year. In Norway, officials surprised with the central bank’s first post-pandemic reduction of borrowing costs.

Some extreme scenarios resulting from increased US involvement in the Israel-Iran war could push oil prices as high as $130 to $150 a barrel, particularly if Iran retaliates in a major way, said Jennifer McKeown, chief global economist at Capital Economics Ltd. Such a development would pause further policy easing by central banks, she said.

“Even though central banks would like to think that would be a temporary impact, I think it would be a brave central bank that would cut interest rates,” McKeown told Bloomberg TV.

Brent futures have been pricing in a geopolitical premium of about $8 a barrel since Israel and Iran began attacking each other last week, according to a survey of analysts and traders. US intervention in the conflict would bolster that further, but exactly how much would depend on the nature of the involvement, the nine respondents said.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.9% as of 4:28 p.m. New York time
• The MSCI World Index fell 0.3%
• Nasdaq 100 futures fell 1.1%
• The MSCI Asia Pacific Index fell 1.4%
• The MSCI Emerging Markets Index fell 1.4%
• S&P/BMV IPC fell 1.2%, more than any closing loss since May 30

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.1496
• The British pound rose 0.3% to $1.3467
• The Japanese yen fell 0.2% to 145.44 per dollar
• The offshore yuan rose 0.1% to 7.1863 per dollar
• The Mexican peso fell 0.1% to 19.0346

Cryptocurrencies

• Bitcoin fell 0.5% to $104,331.82
• Ether fell 0.8% to $2,510.17

Bonds

• The yield on 10-year Treasuries was little changed at 4.39%
• Germany’s 10-year yield advanced two basis points to 2.52%
• Britain’s 10-year yield advanced four basis points to 4.53%

Commodities

• West Texas Intermediate crude rose 0.9% to the highest in more than 11 months
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Alex Longley and Sebastian Boyd.

©2025 Bloomberg L.P.