Wall Street futures decline up to 2% as US-Iran tensions fuel inflation fears

US markets decline on war with Iran. 

• Wall Street futures fall up to 2 percent amid West Asia tensions.
• Energy prices rise, sparking inflation worries and market drops.
• Asian and European stocks see steepest two-day drop since April.

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Wall Street futures declined up to 2 percent on Tuesday, signalling a weak opening for US markets amid escalating tensions in West Asia that pushed up energy prices and heightened inflation concerns.

At around 4.30 pm IST, futures linked to the Nasdaq-100 were down 2.26 percent. Futures of the S&P 500 fell 1.75 percent, while Dow Jones Industrial Average declined 1.68 percent.

The decline came as the conflict involving Iran entered its fourth day with no signs of de-escalation, raising fears of prolonged disruption to energy markets and a spike in inflation. An extended conflict involving Iran is seen keeping crude prices elevated, reinforcing upside risks to inflation and complicating the US Federal Reserve’s policy path.

US President Donald Trump said there was no fixed timeline for developments, while Secretary of State Marco Rubio said "the hardest hits are yet to come". The US embassy in Riyadh was attacked by drones, and Israel sent soldiers into southern Lebanon, where the Iran-aligned Hezbollah militia operates.

European and Asian equity benchmarks headed for their steepest two-day decline since April.

In Asia, South Korean equities recorded their worst selloff since 2024 amid rising geopolitical tensions. The KOSPI plunged 7.2 percent in its worst session since August 2024 as markets reopened after a holiday. Shares of Samsung Electronics and SK Hynix fell at least 9.9 percent each.

Japan’s Nikkei 225 dropped over 3 percent. Hong Kong’s Hang Seng Index fell more than 1 percent, while China’s SSE Composite Index slipped over 1 percent.

In Europe, the Stoxx Europe 600 was down more than 3 percent.

Markets in India were closed on Tuesday on account of Holi.

Gift Nifty also extended losses as the conflict entered its fourth day, raising concerns over potential disruption to India’s energy supplies and inflationary pressures. At around 4.30 pm IST, Gift Nifty futures were trading at 24,360, down 632.5 points or 2.53 percent, indicating a negative start for domestic equities on Wednesday.

On Monday, the BSE Sensex had fallen 2,743.46 points or 3.37 per cent to 78,543.73 in early trade before settling at 80,238.85, down 1,048.34 points or 1.29 per cent.

The Nifty 50 dropped 575.15 points or 2.28 per cent to 24,603.50 during the session and ended 312.95 points or 1.24 per cent lower at 24,865.70.

(With inputs from Bloomberg)

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