Wall Street poised for lower open as Mideast de-escalation uncertainty weighs

By Purvi Agarwal and Twesha Dikshit

March 26 (Reuters) – U.S. stock index futures pointed to a lower open on Thursday following gains in the previous session, as investors remained cautious about developments in the Middle East while weighing the prospects for de-escalation in the conflict.

U.S. President ​Donald Trump said Iran was desperate to make a deal to end the fighting, contradicting the Iranian foreign minister, who said Tehran was reviewing a U.S. proposal but had ​no intention of holding talks to wind down the war.

Contradictory signals from both sides left markets on edge, as hopes for a breakthrough to restore shipping through the crucial Strait of Hormuz remained uncertain.

“Hearing a lot of different things come out, you have the market trying to figure out exactly what’s going on. We’re watching oil prices … We’re still a little bit cautious there just because some of the downside scenarios aren’t good for kind of the global economy,” said Jack Herr, primary investment analyst at GuideStone.

“But overall if we can get a quick resolution of this thing, the backdrop for another good year in the market is there with some of the fundamentals and growth numbers, we’re seeing earnings have been pretty strong.”

At 8:37 a.m. ET, Dow E-minis were down 397 points, or 0.85%, S&P 500 E-minis were down 61.25 points, or 0.92% and Nasdaq 100 E-minis were down 275.25 points, or 1.13%.

Wall Street’s main indexes closed higher on Wednesday after Washington delivered a proposal to Iran through Pakistan, while comments from Iranian officials suggested Tehran might be open to diplomatic offers even as it publicly denied any ongoing negotiations.

The escalating conflict in the Middle East has knocked the global economy off a stronger growth path, the OECD warned on Thursday, with a closure of the Strait of Hormuz threatening to push inflation sharply higher.

Central banks have been put in a tough spot with regard to interest rates, with money market participants no longer pricing in any easing from the U.S. Federal Reserve this year. Two rate cuts had been expected before the Iran conflict erupted, according to the CME Group’s FedWatch Tool.

Data showed the number of new Americans filing for unemployment benefits rose 21,000 for the week ended March 21, in line with estimates, according to economists polled by Reuters.

Comments from Federal Reserve officials Lisa Cook, Stephen Miran, Michael Barr and Philip Jefferson will also be parsed during the day.

Among individual movers, Jefferies Financial dipped 1.1% in premarket trading, after the investment bank missed analysts’ estimates for first-quarter profit due to losses on loans to collapsed companies.

Shares of Olaplex Holdings jumped 51% after Germany’s Henkel agreed to buy the hair-care brand in a $1.4 billion deal.

U.S.-listed shares of gold miners slipped as bullion prices declined more than 2%. Newmont slipped 3.4%, Sibanye Stillwater lost 4.8% and Harmony Gold shed 4.1%.

(Reporting by Purvi Agarwal and Twesha Dikshit in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)