Crude oil prices experienced a notable decline, with Brent crude futures falling below $80 and down over a third from recent peaks, following reports that the U.S. will waive sanctions on Iranian oil as part of a deal to end the war. This prospect of additional supply, coupled with optimism about the resumption of Middle East exports, led to lower U.S. Treasury yields, which steadied at 4.43% (down around 23 basis points from a May peak). German 10-year government bond yields, the Eurozone benchmark, also fell for a fifth consecutive day, hitting their lowest point since early April, last down 1.6 basis points at 2.91%. British yields also dropped sharply after May inflation unexpectedly remained at a 13-month low of 2.8%.
Stock markets presented a mixed picture globally. The pan-European STOXX 600 rose 0.1%, staying close to Monday's record, despite BMW shares falling 8% after the automaker cut its 2026 outlook due to a downturn in China and the U.S.-Israeli war's impact on Iran. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4%, with South Korean shares rising 2.3%. However, Hong Kong stocks were weighed down by weaker-than-expected retail sales and fixed-asset investment data from China. In the U.S., S&P 500 futures rose 0.3% after a tech-led selloff, while the Nasdaq 100 fell nearly 2% on Tuesday.
Traders are keenly awaiting Federal Reserve Chair Kevin Warsh's debut, as markets anticipate he will maintain a balance between his dovish president and market expectations for a rate hike this year. Although a change in the Fed funds rate is unlikely, focus will be on the press conference, Warsh's vote, and committee members' projections for future easing. The euro firmed slightly to around $1.16, and despite a rate hike in Japan, the yen remained at 160.2 to the dollar, protected by the risk of official intervention. Gold moved 0.4% higher to $4,321.22 an ounce. The People's Bank of China also signaled a potential shift in its monetary policy framework towards greater emphasis on overnight rates. Sweden's Riksbank kept its policy rate unchanged but forecast a possible hike ahead.
