Global stock markets hovered near record highs on Wednesday as geopolitical tensions in the Middle East eased, particularly with a ceasefire between Israel and Iran appearing to hold. This reduction in conflict risk lowered fears of supply disruptions in the global oil trade. Market attention turned back to U.S. inflation trends and potential interest rate cuts. Crude oil prices rebounded after three days of losses, reflecting the complex interaction between geopolitical events and economic indicators.
U.S. Markets Mixed as Fed Cautions on Inflation, Global Shares Show Divergence
The U.S. equity market delivered mixed results. While the S&P 500 remained flat, it still hovered near record levels last seen in February. Technology and communication services sectors gained, offsetting declines in real estate, consumer staples, and utilities. The Dow Jones Industrial Average dropped 0.25%, while the Nasdaq Composite advanced 0.31%. European shares declined 0.74%, whereas Asia-Pacific shares outside Japan rose 0.96%, highlighting regional disparities in market sentiment.
Global Markets Near Record Highs as Ceasefire Eases Tensions and Focus Shifts to InflationFederal Reserve Chair Jerome Powell resumed his congressional testimony, this time addressing the Senate Banking Committee. He indicated that while tariff plans from the Trump administration may lead to a short-term rise in prices, the broader risk of sustained inflation remains significant. Powell emphasized the need for caution in considering further interest rate cuts. Meanwhile, market participants weighed the inflation outlook against potential economic resilience, influenced by stabilizing energy costs and global political developments.
Oil Rebounds as Tensions Ease; Dollar Dips, Investors Weigh Inflation and Policy Signals
Crude oil prices saw a modest recovery, with Brent rising 0.8% to $67.68 per barrel and WTI climbing 0.9% to $64.92. This followed a sharp 13% drop earlier in the week, which was triggered by U.S. strikes on Iranian nuclear facilities. The rebound was supported by easing geopolitical tensions and speculation over future demand. In commodities, gold prices showed mixed trends: spot gold rose slightly while U.S. gold futures slipped, reflecting investor uncertainty amid fluctuating inflation expectations and currency movements.
Currency markets reacted notably, with the U.S. dollar dropping to its lowest level against the euro since 2021 but gaining against the Japanese yen. The euro strengthened 0.43% to $1.1658, while the dollar index slipped 0.27% to 97.69. These changes were accompanied by a dip in the yield on 10-year U.S. Treasury notes, which fell one basis point to 4.283%. The overall currency and bond movements suggested a cautious investor outlook, balancing interest rate policy expectations with geopolitical developments.
