Iran conflict enters the fifth day, futures decline, oil prices rise — Market updates

Investing.com - As Iran’s military clashes with the US and Israel, futures linked to major US stock indices decline slightly. Oil prices rise, with all eyes on the near-stalled oil and natural gas shipping activities through the Strait of Hormuz off Iran’s southern coast. After the dollar strengthened, reducing gold’s appeal as a safe-haven asset, gold prices rebounded. CrowdStrike released its expected annual financial guidance, and reports indicate OpenAI is considering a new contract with NATO.

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1. Futures decline

On Wednesday, US stock index futures fell, continuing the sharp volatility from the previous trading day, as traders closely monitor escalating Middle East conflicts that could cut off key oil and natural gas supplies.

As of 02:58 AM Eastern Time (15:58 Beijing Time), Dow futures dropped 109 points, down 0.2%; S&P 500 futures fell 15 points, down 0.2%; Nasdaq 100 futures declined 91 points, down 0.4%.

Major Wall Street indices closed lower on Tuesday but rebounded from deep early losses. US Treasury yields surged as markets bet that a significant rise in oil prices could lead to higher inflation and delay Federal Reserve rate cuts, causing volatility across various assets.

Capital Economics North America economist Bradley Saunders told Investing.com, “While yields on government bonds in other countries show similar patterns, the impact is particularly pronounced in the US because the US market has already priced in multiple rate cut expectations.”

The conflict between Iran and the US and Israel-led coalition has entered its fifth day, with Iran launching missile attacks on US bases across the Middle East and some Gulf countries. Although a senior US military commander said operations against Tehran are progressing ahead of “operational plans,” concerns are growing that the bombing could escalate into a prolonged and indefinite regional war.

In addition to the conflict, market concerns about private credit are lingering after BlackRock’s flagship private credit fund saw a significant redemption increase.

2. Oil prices rise

A core concern is that violence in the Middle East could lead to a long-term disruption of oil tanker shipments through the Strait of Hormuz, a vital waterway through which a substantial portion of global oil and natural gas supplies flow.

Brent crude oil was around $73 per barrel before the Iran attacks and has now risen to about $83. The latest Brent futures quote is $83.48 per barrel, up 2.6%, while US WTI crude futures rose 2.5% to $76.41 per barrel.

On Tuesday morning, oil prices surged as much as 8% but then retraced most of those gains, after President Trump hinted that the US might start escorting ships through the Strait of Hormuz.

Meanwhile, natural gas prices, essential for power and heating, soared in Europe and Asia. Iran’s attack on Qatar’s natural gas facilities has halted gas exports from this major producer, causing supply shortages in several dependent countries.

At the same time, diesel prices are climbing, potentially putting upward pressure on transportation costs, a key component of inflation data.

Concerns over rising energy costs have particularly hurt Asian stock markets. Countries like South Korea and Japan, heavily reliant on imported oil and natural gas through the Strait of Hormuz, are exposed to risks from reduced shipping activity in this narrow corridor. South Korea’s Kospi index fell so sharply on Wednesday that trading was temporarily halted.

The New York Times reports that some analysts believe the sharp decline in Asian markets may be a “backlash” against recent overly optimistic sentiment about progress in regional AI companies.

3. Gold rebounds

On Wednesday, gold prices rose, marking the latest turn in recent rollercoaster trading.

Spot gold increased 1.7% to $5,176.75, after plunging nearly 5% in the previous session. Gold futures also gained 1.3%.

While gold priced in dollars is traditionally seen as a safe-haven asset during crises and high inflation, the dollar’s strength has diminished its appeal. Investors seem to be pulling out of the recently expensive and record-high gold.

The dollar index, which surged nearly 1.5% over the past two days, was mostly flat on Wednesday.

4. CrowdStrike earnings

In earnings news, CrowdStrike reported Q4 results that exceeded Wall Street expectations and issued a FY2027 guidance that was roughly in line with forecasts, amid ongoing investor concerns about AI disrupting the software sector.

The cybersecurity company’s stock slightly declined in after-hours trading on Wednesday.

The Austin, Texas-based cybersecurity firm reported Q4 earnings of $1.12 per share, above the analyst consensus of $1.10. Revenue rose to $1.31 billion, slightly above the $1.30 billion market consensus.

Executives said that AI adoption in enterprises is creating additional demand for security tools, enabling CrowdStrike to expand as it protects AI workloads and data.

5. Reports suggest OpenAI considering new NATO contract

On Tuesday, multiple media outlets reported that OpenAI is exploring a new contract with NATO, following its recent agreement with the US Department of Defense.

The Wall Street Journal first reported comments from OpenAI CEO Sam Altman, stating that the startup is considering a contract deployed across all NATO classified networks. The WSJ later clarified that Altman misspoke, and the contract is actually for non-classified networks.

Reuters reports that the AI startup is considering signing a contract to deploy its AI technology on NATO’s non-classified networks.

Last week, OpenAI announced an agreement to deploy its AI technology within Pentagon classified networks, amid significant disagreements with the Department of Defense over the use of AI models, which Washington has designated as a “supply chain risk.”

Anthropic was removed from the project after refusing to allow its AI models to be used for domestic mass surveillance or to power fully autonomous lethal weapons.

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