Trump's Threats to Iran Approaching; Broadcom Reaches Agreement with Google — Market Trends Overview

Investing.com - Futures tied to major U.S. stock indexes fell, while oil prices hovered above $110 a barrel, as President Trump’s set deadline for reaching an agreement to halt hostilities against Iran was approaching. The president left room for diplomacy, but a threat of escalation said that if no agreement was reached by Tuesday night, strikes would be carried out against bridges and power plants across Iran. Aside from the war, Broadcom’s stock price jumped after the chip group signed a new deal with search giant Google, while Samsung Electronics posted impressive preliminary results.

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1. Futures fall

U.S. stock index futures inched lower on Tuesday, as investors took a cautious stance ahead of Trump’s deadline for Iran to agree to a ceasefire or face a heavy bombing of its infrastructure.

As of 03:15 a.m. Eastern Time (15:15 Beijing Time), the Dow futures contract fell by 104 points, down 0.2%, S&P 500 futures fell by 25 points, down 0.4%, and Nasdaq 100 futures fell by 118 points, down 0.5%.

The three major Wall Street indexes all closed higher on the prior trading day, as traders looked for signs of progress in negotiations to end a conflict that has stretched for more than a month.

Although hopes for peace in the Middle East dominated discussions among traders, the impact of war on the U.S. economy remained the focus. Data showed that the expansion rate of the U.S. services sector in March was slower than expected, a period that included most of the fighting. Employment in this key industry also shrank, while the cost of pay (an inflation gauge) surged to the highest level since October 2022.

Meanwhile, concerns about the health of the $1.8 trillion private credit market continued to linger. Blue Owl Capital’s share price has become a proxy for these worries, with the company’s stock falling to its lowest historical closing level after it said it would limit redemptions of two funds due to increased redemption requests.

2. Oil prices rise ahead of Trump’s Iran deadline

At the same time, oil prices remained elevated, as shipping traffic through the Strait of Hormuz was still only a trickle.

Global benchmark Brent crude oil futures rose 1.5% to $111.45 a barrel, while U.S. WTI crude oil futures jumped 2.4% to $115.14 a barrel.

The Strait of Hormuz is a vital waterway off Iran’s southern coast, with about one-fifth of the world’s oil passing through the strait. But for weeks, oil tankers have been able to transit only with great difficulty, raising concerns about the flow of global crude supply. Asian countries are heavy importers of energy products through the strait, and European countries also use natural gas imports originating in the Persian Gulf.

At a Monday news briefing, Trump emphasized that any ceasefire agreement must include assurances from Iran to reopen the strait. If Tehran does not do so before the U.S. Eastern Time Tuesday 8:00 p.m. deadline set by the president, the president vowed to strike Iran’s bridges and power plants, with an intensity so great that the country would “need 100 years to rebuild.”

But, as always, Trump kept changing course unpredictably for a diplomatic solution, saying Iran “is hoping to reach an agreement.”

3. Broadcom and Google sign an agreement

Broadcom’s stock jumped in after-hours trading after the chip company signed a long-term deal with Google to develop and support custom next-generation AI optimized processors.

Broadcom also said it will provide networking and other components for Google’s AI racks by 2031.

In addition, the group agreed to supply about 3.5 gigawatts of AI compute capacity to AI startup Anthropic starting next year, with that capacity coming from Google’s AI processors.

Analysts at Vital Knowledge said in a report to clients that these deals suggest that Broadcom’s previously forecast guidance for 2027 AI revenue exceeding $100 billion carries “upside risk.”

4. Samsung’s surprising preliminary results

Samsung Electronics on Tuesday forecast that first-quarter profit would surge sharply, as booming demand for AI chips drove a strong rebound in its semiconductor business.

The company said it expects operating profit for the January-to-March period to be about 57.2 trillion won ($38 billion), up more than eight times from 6.69 trillion won in the same period last year.

Revenue is expected to be about 133 trillion won, compared with 79.14 trillion won in the same period last year.

This optimistic outlook highlights a strong rebound in the memory chip market, as rapid growth in generative AI applications is accelerating demand for high-bandwidth memory (HBM) and other AI-related semiconductors.

5. Pershing Square Capital proposes to acquire Universal Music Group

Also, Universal Music Group’s share price, listed in Amsterdam, surged by more than 14%, after Bill Ackman’s Pershing Square Capital announced it would acquire the company in a cash-and-stock transaction worth more than €55 billion.

Pershing Square said the transaction would merge Universal Music with Pershing Square Sparc Holdings, create a new company headquartered in Nevada, and move the stock’s listing venue to the New York Stock Exchange. The record company began trading in Amsterdam in 2021 after being spun off from conglomerate Vivendi.

In a statement, Ackman said Universal Music’s stock has been “underperforming due to a range of issues unrelated to business performance,” and that those issues can be “resolved through this transaction.”

After Pershing Square announced the acquisition offer, the shares of European media companies such as Vivendi and Bollore also rose.

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