It takes two to tango. The United Arab Emirates said Monday it had been attacked by Iranian drones and missiles in an apparent violation of the fragile ceasefire between Iran and the U.S. The strike sent oil prices higher on Monday and pressured equities. President Donald Trump, however, doesn’t appear to want to escalate. In an interview with ABC News, Trump said that just one missile “got thorough. Not huge damage .” Traders on the Street are taking this as a bullish sign that Trump may be looking for an off-ramp to the conflict — which would give stocks a boost. “Trump’s public comments about yesterday’s incidents were mostly dismissive and unconcerned, suggesting the White House would like to keep the overall process on a trajectory of de-escalation,” wrote Adam Crisafulli of Vital Knowledge. This line of thinking appeared to boost equities early Tuesday. Stock futures pointed to solid gains , setting up the major averages for a chance to recover from Monday’s pullback . @SP.1 5D mountain S & P 500 futures 5-day chart “The lack of retaliation so far and Donald Trump’s comments … underline that he continues to avoid the resumption of full-scale hostilities, seemingly recognizing that this would not help bring down energy prices in the United States, or likely lead to an Iranian abandonment of its red lines at the negotiations,” Jacob Funk Kirkegaard, head of European research at 22V Research, said in a note Tuesday. “Trump’s clear policy preference will likely remain a negotiated solution — a preference underlined by his ongoing restraint in the face of Iranian escalation. This may change at any moment of course, but so far recent escalatory events should not alter the base case scenario for a negotiated solution,” Kirkegaard added. But not everyone on the Street is as bullish. JPMorgan’s trading desk said: “Given the potential resumption of the kinetic conflict, you may consider concentrating portfolios around Tech and Energy as we may see a near-term pullback.”
