Global markets traded mixed Wednesday as investors weighed reports that a US-Iran peace agreement could be signed Friday, while awaiting the Federal Reserve's latest policy decision and assessing pressure on technology stocks.
Investor sentiment has been supported by expectations that the Strait of Hormuz will return to normal operations, but uncertainty over the details and implementation of the agreement has kept markets cautious.
The agreement between Washington and Tehran is expected to be signed Friday in Switzerland. Iranian Deputy Foreign Minister Majid Takht Ravanchi said the United States partially lifted its naval blockade of Iranian vessels before the two sides reached an agreement on June 14.
Despite positive statements from both governments, investors remain focused on how the agreement will be implemented.
Analysts say reopening the Strait of Hormuz and restoring oil flows to normal levels could take months. Reports that the agreement may allow Iran to resume oil and fuel exports have nevertheless improved market sentiment.
Attention is also centered on the Federal Reserve's policy meeting, the first under Chair Kevin Warsh.
The Fed is widely expected to leave interest rates unchanged, but investors are looking for clues about the future policy path in Warsh's first post-meeting remarks. Analysts say his comments could have a significant impact on market volatility.
Markets are also assessing the possibility that the Fed could lower its growth forecasts while raising its inflation projections, a combination that has weighed on risk appetite.
Warsh is not expected to include his own projections in the Fed's dot plot, which is due to be released Friday. Investors are watching for signs that he may depart from approaches followed by previous Fed chairs Jerome Powell, Janet Yellen and Ben Bernanke.
Amid hopes for a lasting peace in the Middle East, Brent crude fell 1.4% to $78.20 a barrel, its lowest level since March 3. Analysts caution, however, that oil prices are unlikely to return quickly to prewar levels because supply disruptions may take time to reverse and Iran could seek transit fees for passage through the Strait of Hormuz.
Some analysts have suggested oil traffic could be redirected to the Omani coast if such fees are imposed, though establishing secure alternative routes could take weeks or months.
The yield on the benchmark 10-year US Treasury note was little changed at 4.44%, while the US Dollar Index hovered near 99.5.
Gold slipped 0.1% to $4,325 an ounce as investors awaited further details of the US-Iran agreement.
The World Gold Council said this week that central banks are expected to continue increasing their gold holdings, while the US dollar's share of global reserves is likely to decline over the next five years.
On Wall Street, major indexes closed mixed Tuesday as technology stocks came under pressure.
Shares of SpaceX extended gains for a third session following the company's historic initial public offering announcement. The stock rose as much as 17% during the day before closing 4.83% higher.
The rally briefly lifted SpaceX above Amazon and, for a short period, Microsoft by market capitalization. The company ended the session as the world's sixth-most valuable firm with a market value of $2.6 trillion.
SpaceX also announced an agreement to acquire artificial intelligence coding startup Anysphere, the maker of Cursor, at a valuation of $60 billion.
The Dow Jones Industrial Average rose 0.64% to a record 52,190.29, while the S&P 500 fell 0.57% and the Nasdaq Composite lost 1.15%. US stocks opened higher Wednesday.
In Europe, investors remained cautious about how quickly energy flows through the Strait of Hormuz could normalize. Markets are also grappling with expectations that inflationary pressures may persist, prompting the European Central Bank to consider a second rate increase this year.
The European Parliament approved measures to implement the EU-US trade agreement.
In Germany, economic confidence among institutional investors and analysts improved more than expected in June amid signs of easing tensions in the Middle East.
The ZEW Economic Sentiment Index rose to 10.5 points in June from minus 10.2 in May, well above market expectations of minus 6.
European markets closed higher Tuesday, with London's FTSE 100 gaining 0.61%, Frankfurt's DAX 40 rising 0.07%, Paris' CAC 40 advancing 0.75% and Milan's FTSE MIB 30 climbing 1.15%. Markets opened mixed Wednesday.
Asian markets reflected the mixed tone seen on Wall Street.
Japan's exports rose 17% year-on-year in May, their strongest increase since November 2022, driven by demand for semiconductors. Imports increased 12.5%, the fastest pace since January 2025.
China's central bank said it plans to refine its short-term interest-rate framework and could expand overnight reverse repo operations at an appropriate time.
Near the close, Japan's Nikkei 225 gained 0.5% and South Korea's Kospi rose 0.7%, while China's Shanghai Composite slipped 0.2% and Hong Kong's Hang Seng fell 0.4%.
*Writing by Emir Yildirim
