Dow Jones and Nasdaq called lower as Trump says Iran ceasefire 'over'

US stocks are expected to extend losses on Wednesday after oil prices spiked following an exchange of strikes between the US and Iran that led to President Donald Trump declaring the ceasefire “over”. 

Dow Jones futures were down 1.1%, with S&P 500 futures pointing to a 0.9% drop, while those for the Nasdaq were off 1.3%.

A day earlier, the Nasdaq led the declines, falling 1.2% to 25,819 as chipmakers came under heavy pressure, with the S&P slipping 0.5% to 7,504 and the Dow finishing down 0.3% to 52,925 after briefly hitting a new high above the 53,000 mark earlier.

This came as oil prices started rising following reports of attacks on commercial ships in the Strait of Hormuz.

Then overnight, US forces launched strikes against more than 80 targets in Iran, with Central Command reporting that these were aimed at command-and-control networks, coastal radar sites, anti-ship missile capabilities, and Islamic Revolutionary Guard Corps small boats.

Alongside this, the US Treasury Department revoked a waiver that had allowed Iran to restart oil exports, which was followed by Tehran resuming attacks on its Gulf neighbours, including against Bahrain and Kuwait. 

When asked about the ‘memorandum of understanding’ deal, Trump told reporters at the Nato summit: “To me, I think it’s over. I don’t want to deal with them anymore. They’re scum… They’re led by sick people. 

“I’ll speak to our negotiators. They want to negotiate – they’re good people… but they have to come back to me. As far as I’m concerned, it’s just a waste of time dealing with them.”

West Texas Intermediate crude jumped 5.4% to $74.26 a barrel, continuing a rise from just above $67 last week.

The rise in oil has fuelled inflation concerns, pushing Treasury yields higher and prompting traders to dial back expectations of interest rate cuts.

Traders now see more than an 85% chance of at least one 25-basis point rate hike from the Federal Reserve before year-end, according to the CME’s FedWatch tool.

It comes ahead of minutes from the Fed’s last monetary policy meeting in June, which will be released later.

“But,” said market analyst David Morrison at Trade Nation, “with new Fed Chair Kevin Warsh unwilling to provide forward guidance, it’s debatable if the minutes will be that helpful in understanding the Fed’s outlook for rate hikes this year.”