US stocks are set to extend their rally on Wednesday, 1 April, on hopes of an end to the war in the Middle East.
Nasdaq futures were pointing to a 0.9% gain, with Dow Jones and S&P 500 futures up 0.7%.
Stocks had rallied sharply the previous day after encouraging comments from Washington and Tehran on a potential end to the war in the Middle East.
The Nasdaq surged 3.8% to close at 21,591, the S&P 500 rose 2.9% to 6,529 and the Dow Jones jumped 1,125 points or 2.5% to 46,342. Small caps joined in, with the Russell 2000 climbing 3.4% to 2,496.
It was the S&P's best day since last May. March was still the worst monthly performance since 2022, with the three major benchmarks all shedding more than 5%, which would have been over 7% as the indexes were trading at a near eight-month lows before the strong rally in the latter part of the session.
It came on the back of Iran’s state news agency reporting that Iranian President Pezeshkian said Iran is willing to end the war but only if there are guarantees “to prevent the recurrence of aggression”.
That saw President Trump say last night that he foresees ending the war "within two weeks, maybe three" but suggested that "we’re not going to have anything to do with" what happens in the Strait of Hormuz, adding to other recent comments that the US does not see reopening Hormuz as necessary to end the war.
Oil markets saw some relief, with
WTI crude dropping to below $98 in the early hours, but edging back up on uncertain prospects for the Strait of Hormuz.
There were reports of comments from Iran’s parliament that the Strait "will not open" and a denial that there had been any negotiations, "and we will not hold them", while elsewhere it was said that UAE is preparing to help allies open the waterway through force.
Bond yields fell, with the 10-year US Treasury dropping to levels last seen two weeks ago, while gold climbed back above $4,700 an ounce, from around $4,500 late on Monday.
Market analyst David Morrison at Trade Nation said: "There’s no doubt that yesterday’s rebound has been impressive and helped along by a pullback in oil prices. But the situation is muddied due to end of quarter position-squaring.
"It’s also challenging to express just what investors are pricing in, and what they’re not. For a start, investors are obviously desperate to add to their exposure at lower levels, calculating that hostilities are effectively over.
They don’t believe there will be US military boots on the ground, and any attempt to seize Kharg Island is now unlikely.
But this could be a miscalculation, and the war may take longer to conclude than many are currently forecasting. In addition, investors may not be factoring in the economic damage already done," he said, with Gulf energy infrastructure damaged, production halted and likely to take time to restart, with shipping lanes still closed.
Today brings earnings updates from Conagra Brands, Lamb Weston and Cal-Maine Foods, as well as economic releases including retail sales, the ADP employment change and the ISM manufacturing PMI.
