Dow Jones Forecast: DJIA rises with US-Iran and chip stocks in focus

US futures                                          

Dow futures 0.17%, S&P futures 0.36%  & Nasdaq futures 1%

In Europe                                                                        

FTSE 0.1% & DAX 0.83%

• U.S futures are rising, led by tech
• Investors take US-Iran developments in their stride
• FOMC minutes point to a divided Fed
• Oil eases after recent Middle East-inspired gains

U.S. Stocks Rise as AI Recovery Offsets Middle East Concerns

U.S. stocks have opened higher on Thursday as a rebound in semiconductor shares outweighs renewed geopolitical tensions following another exchange of strikes between the U.S. and Iran.

The Middle East remains a key focus after President Trump declared that the ceasefire with Iran was over earlier this week. However, today's market reaction suggests investors continue to view the latest escalation as a temporary setback rather than the start of a prolonged conflict.

Oil prices are pulling back after Wednesday's sharp rally, indicating that markets still expect diplomacy to ultimately prevail and that any disruption to global energy supplies is likely to be limited.

Meanwhile, chip stocks are helping lift sentiment after recovering from yesterday's sell-off. The VanEck Semiconductor ETF is up more than 4% in pre-market trading, reviving the AI trade after recent concerns over stretched valuations and whether heavy AI investment will generate returns quickly enough to justify current share prices.

On the macro front, U.S. weekly jobless claims fell, reinforcing the view that the labour market remains resilient despite last week's softer-than-expected non-farm payrolls report.

The data follow the release of the minutes from the Federal Reserve's June meeting, which revealed a more divided Committee than markets had expected. While policymakers remained concerned about inflation, there was little sense of urgency to tighten policy immediately. Even so, markets continue to price around a 65% probability of a 25-basis-point rate hike by September.

Corporate Movers

Meta is down around 4% after reports that the company plans to begin mass production of its own AI chips from September, raising concerns over near-term capital expenditure.

AstraZeneca is falling around 8% after its experimental heart disease treatment failed to meet its primary endpoint in a late-stage clinical trial.

PepsiCo is in focus after posting mixed second-quarter results. Earnings per share came in at $2.20, just below expectations of $2.21, while revenue beat forecasts at $24.18 billion versus expectations of $23.95 billion.

Levi Strauss is down around 4% after issuing weaker-than-expected third-quarter guidance, forecasting earnings per share of 34–36 cents, below analysts' expectations of 38 cents.

Dow Jones Forecast – Technical Analysis

The Dow Jones continues to trade within a rising channel that has been in place since mid-April.

After reaching a record high around 53,350 near the upper boundary of the channel, the index has pulled back towards the midpoint. Despite the recent consolidation, the broader uptrend remains intact.

Buyers will look for a move back towards 53,350 and fresh record highs.

Initial support is located around 52,000. A break below this level would expose 51,325, where the lower boundary of the rising channel coincides with the June 22 swing low.

FX Markets – Dollar Softens

The U.S. dollar is edging lower after failing to attract significant safe-haven demand despite renewed tensions in the Middle East. The greenback also remains under pressure after the Federal Reserve minutes highlighted a divided Committee rather than signalling a stronger commitment to further tightening.

EUR/USD is rising alongside the weaker dollar after the ECB's June meeting minutes highlighted ongoing concerns about inflation persistence. Policymakers acknowledged that inflation could remain above the ECB's 2% target until the first half of 2027, supporting expectations that policy will remain restrictive.

GBP/USD is trading modestly higher near 1.3400 as the weaker U.S. dollar offsets a quiet domestic calendar. Sterling has also found support as investors view likely incoming Prime Minister Andy Burnham's commitment to the UK's fiscal rules as reducing concerns over fiscal credibility.

Oil Eases as Markets Continue to Price Eventual De-escalation

Oil prices are giving back part of Wednesday's gains as investors continue to assess the implications of renewed tensions between the U.S. and Iran.

Although crude rallied sharply after fears that negotiations had broken down, today's pullback suggests markets still expect the disruption to prove temporary rather than the beginning of a prolonged supply shock.

Before the latest escalation, oil had fallen back to pre-conflict levels as investors anticipated stronger OPEC+ supply and improving flows through the Strait of Hormuz.

While geopolitical risks have reintroduced a risk premium, the broader outlook remains balanced between the threat of renewed supply disruptions and expectations that additional production will help offset any sustained loss of Iranian exports.

Investors will also be watching plans by governments to replenish strategic petroleum reserves over the coming years, which could provide an additional source of demand even if geopolitical tensions begin to ease.