US 'Completes' Strikes on Iran, Stock Futures Rise as Risk Appetite Returns

Market Sentiment Warms: Stock Futures Rise as US Declares Iran Strikes 'Complete'

After a week of heightened geopolitical tension, US stock futures moved higher in Monday evening trading. The move followed the US military's announcement that it had 'completed' strikes on specific targets inside Iran, signaling no immediate plans for further escalation. The market interpreted this as a sign that the conflict was contained for now, easing risk aversion.

Geopolitical Risk Cools, Risk Assets Get a Boost

According to reports, a US Defense Department official stated in a release that the strikes on Iranian military facilities had been 'completed as planned,' with no immediate plans for a new round of attacks. This language contrasted with earlier market fears of an 'indefinite conflict,' prompting investors to reassess risk asset pricing. S&P 500 futures, Nasdaq 100 futures, and Dow Jones Industrial Average futures all posted gains, with the tech-heavy Nasdaq leading the advance.

Analysts noted that geopolitical events often impact US stocks in a 'pulse-like' pattern—sharp declines on initial uncertainty, followed by a rapid rebound once the scope of conflict is clearly limited. The US official's 'complete' statement provided the psychological anchor the market needed for a 'relief rally.'

Energy and Defense Sectors Diverge, Tech Leads

At the sector level, market reactions showed clear divergence. With the 'completion' of strikes reducing the risk of crude oil supply disruptions, international oil prices briefly spiked then retreated. Energy sector futures came under pressure, while defense stocks that had risen on safe-haven buying also showed signs of profit-taking. Meanwhile, technology and growth stocks regained favor, with major tech companies like Apple, Microsoft, and Nvidia active in pre-market trading.

This sector rotation reflects a market shift from 'risk-off' to 'risk-on' mode. Investors are refocusing on corporate fundamentals and the Federal Reserve's policy path, rather than pure geopolitical premiums. According to market observers, if no new escalation signals emerge, capital may continue to flow from defensive sectors into cyclical and technology stocks.

Fed Policy Expectations: Geopolitical Disturbance Unlikely to Alter Rate-Cut Timeline?

Although geopolitical events dominate short-term sentiment, the Fed's monetary policy direction remains the core variable for the medium-term trend. Before the conflict erupted, markets widely expected the Fed to begin a rate-cutting cycle in the second half of 2025. The geopolitical tension-driven oil price spike had raised 'stagflation' fears—slowing growth combined with stubborn inflation—which could force the Fed to delay rate cuts.

However, with the strikes 'complete' and oil prices retreating, those concerns have eased. According to CME FedWatch data, the market's implied probability of a June rate cut edged up after the event. Fed officials in public remarks have emphasized they will 'closely monitor' the economic impact of geopolitical events but will not alter their policy path based on a single shock. This relatively restrained stance provided additional support for stock futures.

Technical Analysis and Fund Flows: Key Resistance Level Awaits Breakout

From a technical perspective, S&P 500 futures are attempting to reclaim the 50-day moving average after last week's decline. This level is seen as a short-term bull-bear divide. If futures can break and hold above it, it could trigger short-covering and buying from trend-followers. Conversely, if geopolitical conditions worsen again, the market may test support at the 200-day moving average.

On fund flows, Bloomberg-compiled data showed global equity funds experienced their largest weekly net outflow since December 2024 last week, with most capital flowing into money market funds and gold ETFs. But ahead of this week's open, some capital showed signs of returning. Analysts believe that if the US official's 'complete' pledge is validated by subsequent actions, the trend of capital flowing back into stocks could accelerate.

Outlook: Beware of 'False Complete' Risk

Despite short-term market optimism, multiple institutions advise investors to remain cautious. Historical experience shows that conflicts in the Middle East are often recurring; what is called 'complete' may only be a temporary ceasefire. If Iran retaliates or the US reassesses the effectiveness of its strikes, markets could again experience sharp volatility.

Additionally, this week will see the release of the US February core PCE price index (the Fed's preferred inflation gauge) and speeches from several Fed officials. If inflation data comes in higher than expected, it could offset the positive from geopolitical easing. In summary, the rise in stock futures reflects more of a 'worst-case scenario ruled out' repair rally than a signal of a trend reversal. Investors participating in the rebound should still manage positions and hedge risks.