Andre Janse van Vuuren and Sagarika Jaisinghani

Updated Thu, Jun 19, 2025, 10:34 AM4 min read

(Bloomberg) — Equity futures fell as growing speculation that the US will directly support Israel in its war against Iran fueled geopolitical uncertainty and concerns about the inflationary impact of higher crude prices.

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S&P 500 contracts retreated 0.9% on a day when cash trading in US stocks and Treasuries is closed for a public holiday. Europe’s Stoxx 600 index closed 0.8% lower, falling for a third session. Asian shares dropped 1.4%.

Brent crude advanced past $78 a barrel, extending gains in a week where market reaction to the Middle East conflict has been most concentrated in oil. The dollar rose 0.2% against a basket of currencies.

Traders’ sentiment turned more cautious following a Bloomberg report that senior US officials are preparing for a possible strike on Iran in the coming days. Markets were already on edge after the Federal Reserve downgraded its estimates for growth this year and projected higher inflation.

“If the US does strike, you’re going to see a big knee-jerk reaction,” said Neil Wilson, investor strategist at Saxo UK. “No one will be wanting to make big long bets.”

Israel struck more of Iran’s nuclear sites on Thursday and warned its attacks could bring down Tehran’s leadership as both sides awaited a decision from President Donald Trump on whether to join the offensive.

The odds for the US to become involved are “quite high at this moment in time,” said Anna Rosenberg, head of geopolitics at Amundi Investment Institute.

“For the US, this is a moment to take out a big geopolitical headache, which is Iran potentially developing a nuclear weapon,” Rosenberg told Bloomberg TV. “Having said that, acting comes with a lot of consequences too. Trump will have to make a really difficult decision.”

Among a flurry of monetary policy decisions in Europe, the Bank of England kept its benchmark rate on hold at 4.25%. While the outcome was in line with economists’ expectations, more committee members than anticipated had voted for a cut. The pound fell before erasing the loss.

Earlier, the Swiss National Bank cut its interest rate to zero as policymakers sought to deter investors from pushing up the franc, which has gained almost 10% against the dollar this year. In Norway, officials surprised with the central bank’s first post-pandemic reduction of borrowing costs.