What's next for US equity futures and crude oil post-ceasefire and Fed pivot?

US stock market rises as oil prices drop amid geopolitical tensions

United States (US) stocks closed higher overnight, while crude oil prices fell 9.20% to $67.20 following Iran's pre-signalled retaliatory missile strike on a US air base in Qatar.

The rally in US equity futures and the sell-off in oil futures continued this morning after US President Donald Trump announced a ceasefire between Iran and Israel.

• US (S&P) 500 futures are trading 0.55% higher at 6110
• Crude oil futures are trading 1.5% lower at 66.24, more than 15% below yesterday’s 78.40 high, as the risk premium built into crude oil prices rapidly evaporates.

Ceasefire lifts risk appetite, but uncertainties remain

If the 'Twelve Day' war has indeed ended, market movements could extend. However, there are limitations due to uncertainty surrounding key issues.

Nuclear material risks

The first concern is the whereabouts of 400 kilograms (kg) of enriched uranium that was moved from nuclear facilities, including Fordow and Natanz, just before the US bombing of Iran’s nuclear facilities to prevent seizure or destruction.

In the wrong hands, this uranium could be used as a bargaining chip or further enriched to weapons-grade quality in clandestine centrifuges in Iran or with foreign assistance. Mishandling it poses contamination and radiation risks, even without weaponisation.

Regime durability

Another key uncertainty is whether the current Iranian regime will retain power and continue its 45 years of funding and supporting various militant groups and activities abroad, as well as continuing its human rights violations and restricting the freedoms of its population.

Although these issues remain unresolved, we expect the market, which has a notoriously short attention span, to refocus on tariffs and the Federal Reserve (Fed). The Board members are showing increased division ahead of Fed Chair Jerome Powell's testimony at midnight.

Fed pivot gains traction ahead of Powell’s testimony

Fed Chair Jerome Powell has consistently argued that the Fed should not rush to cut interest rates due to economic uncertainty and tariff-related inflation risks. This approach has won him no friends in the White House.

Fed Governor Christopher Waller broke ranks last week, noting that he could foresee the Fed cutting rates 'as early as July.'

Vice Chair Michelle Bowman echoed similar comments overnight, suggesting the Fed could ease policy as soon as July if inflation remains well-contained. This is a notable departure for Bowman, historically one of the more hawkish Federal Open Market Committee (FOMC) members.

It appears the dovish pivot from the Fed, which we flagged before last week’s FOMC meeting, is fast coming to fruition. Yet, the chance of a July rate cut (currently at 20%) remains significantly underpriced.

Crude oil technical analysis

Technically, the overnight sell-off in crude oil reinforces the importance of a resistance level between $78.40 and $80.77, which marks the October 2024 and year-to-date highs respectively. A breakout above this range would likely require something extremely unexpected and detrimental to the supply/shipping of crude oil.

On the downside, crude oil has tested the $65 - $64 support region (formerly resistance and the top of a two-month range) before bouncing.

Until there is more clarity around the issues posed in the article above, we expect this support region to remain well supported in the sessions ahead.

Crude oil daily chart

US 500 technical analysis

Following the US 500's surge higher on 12 May, our view is that the rally from 21 April low of  5101 was a Wave III (Elliott Wave) that should soon be followed by a Wave IV pullback.

While it is possible that a Wave III high is in place at the recent 6059 high print, a break of support at 5950/5920 is needed to confirm this. Such a break would indicate that a Wave IV pullback is underway towards the 200-day moving average at 5815 and the late-May low of 5767.

Provided the 5815/5770 support area holds, it should then be followed by another leg higher for Wave V, to retest the record 6147 high.

US 500 daily chart

• _{Source: TradingView. The figures stated are as of 24 June 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}