Dow Jones futures nudge higher in pre-open session. What does it mean for US stock market?

US stock futures traded with mild gains in Monday’s session (April 6), as optimism grew that the month-long conflict in West Asia could end soon, boosting risk-on sentiment, while a drop in crude oil prices also supported the market mood.

The US, Iran, and a group of regional mediators are reportedly discussing terms for a potential 45-day ceasefire that could pave the way for an end to the conflict.

Iran and the United States have received a proposal to end hostilities that could come into effect as early as Monday and lead to the reopening of the Strait of Hormuz, Reuters reported, citing sources.

Axios first reported on Sunday that the US, Iran, and regional mediators were discussing a potential 45-day ceasefire as part of a two-phase deal that could ultimately lead to a permanent end to the war, citing US, Israeli, and regional sources.

Tracking these positive developments, the futures of the three key indices—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq—were trading higher in the range of 0.3%–0.5%.

Earlier as well, reports of a potential ceasefire had emerged, but those hopes faded quickly as the US, Israel, and Iran intensified attacks on each other.

A similar improvement in sentiment had lifted the S&P 500 by nearly 6% last week, while the Dow and Nasdaq ended with gains of over 4%. The rally snapped a five-week losing streak for all three indices.

The latest ceasefire reports came after the US President Donald Trump, over the weekend, warned that the US would strike Iran’s power plants and bridges if the Strait of Hormuz is not reopened by Tuesday.

Trump had earlier set multiple deadlines for potential strikes on Iran’s power infrastructure if the strait remained closed, initially giving five days and later extending it to 10 days, which expired today.

Meanwhile, Iran and Oman are reportedly drafting a protocol to “monitor transit” through the Strait of Hormuz. The strait, a vital artery for global oil transit, has remained effectively closed since the conflict began on February 28 following US and Israeli strikes on Iran.

While the disruption in energy supplies has impacted Asian countries and heightened inflation concerns, Trump said the US remains largely unaffected due to its limited reliance on oil shipments through the strait. “We haven’t needed it, and we don’t need it,” he said in an address to the nation on Wednesday night.

Nevertheless, average US gas prices have reportedly surged more than 30% in a month, crossing $4 per gallon for the first time in years. On the economic front, the US economy added 178,000 jobs in March, while unemployment inched down to 4.3% from 4.4%.

Crude oil prices edge lower

Crude oil prices traded lower amid hopes of a potential ceasefire, with Brent crude futures falling 2% to an intraday low of $106.85 per barrel, although they remained above the $100 mark for the seventh consecutive session. WTI futures also declined 2.3% to $115.30 per barrel.

On Thursday, Brent prices had surged over 6% after Trump said military operations would be intensified over the next two to three weeks.

Separately, OPEC+ warned following a weekend meeting that war-related damage to energy infrastructure could have lasting effects on oil supply even after hostilities ease. To offset supply shortages, the group has approved an increase in output quotas.

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