By Dow Jones Newswires Staff
U.S. Treasurys and stock futures rebounded in early European trading following falls Wednesday after Kevin Warsh made a hawkish debut as chair of the Federal Reserve, raising investor expectations of a policy rate hike later this year.
Meanwhile, Brent crude oil slid after President Trump unexpectedly signed a memorandum of understanding in Versailles to end the war with Iran and reopen the Strait of Hormuz. The president said he wanted to avoid an "economic catastrophe," though investors will watch for how quickly shipping through the crucial waterway normalizes.
The signing helped boost investor sentiment, with U.S. stock futures rising across major indexes after Japanese and Korean indexes closed at fresh highs.
The dollar nudged up but 10-year Treasury yields slipped after rising in the last session. Markets have long pulled back from bets that the Fed would cut rates this year.
For the day ahead, the Bank of England is widely expected to follow the Fed's lead in keeping rates on hold when it announces its latest policy rate later.
--In early European trading, Brent crude slid 2.3% to $77.71 a barrel, while WTI was down 2.5% to $74.08 a barrel. Both benchmarks have fallen roughly 15% so far this week, as the U.S.-Iran agreement raised hopes for a gradual normalization of flows and return of Iranian barrels to the market. "While the industry remains cautious about the pace of normalization, some tankers have already resumed movements and exporters such as Iraq are preparing to increase shipments," analysts at MUFG said. While the prospect of additional supply has erased most geopolitical risk premium, global inventories remain tight, particularly in the U.S., where crude stockpiles were down by 8.3 million barrels last week.
--In the U.S., stocks looked set to rally after falling sharply Wednesday in response to the Fed's hawkish turn. Futures for the S&P 500 were up 0.8% while futures for the Dow Jones Industrial Average climbed 0.5%. Futures for tech-heavy Nasdaq rose 1.4%.
--Asian equities were mixed. The U.S.-Iran deal sent both South Korean and Japanese equity markets to new highs. The Kospi ended 2.25% higher at 9063.84, ending above the 9000 level for the first time, while the Nikkei Stock Average rose 1.6% to an all-time high of 71053.49, closing above the 70000 threshold for the first time. However, Hong Kong's Hang Seng Index slumped, and was down 2% in the European morning as real estate and mining stocks fell.
--European indexes were mixed at the open. Rate-sensitive software stocks slid, while some energy-sensitive stocks rallied on falling oil prices. The Stoxx 600 slipped 0.1%. London's FTSE 100 fell 0.7% as oil majors faltered, while house builders fell sharply with Persimmon down 5.45%. Precious metals miners fell, with Fresnillo down 3.2%. The French CAC 40 was flat as gains for industrials--Schneider Electric was up 1.7%--countered a slip in luxuries. Germany's industrial-heavy DAX climbed 0.25%, led by semiconductor manufacturer Infineon Technologies--up 4.55%. The Dutch AEX slipped 0.3% as software stocks slid, despite modest gains for semiconductor stocks. Cross-listed Relx fell 2%. The Italian FTSE MIB rose 0.2%. Spain's IBEX 35 was down 0.15% as software group Amadeus lost 2.1%.
--The dollar held higher after reaching an 11-week high against a basket of currencies on Wednesday after the Fed's signaling of a possible interest-rate rise before year-end. Warsh also emphasized that policymakers were "unambiguously and unanimously" committed to bringing inflation back to the Fed's 2% target. The DXY dollar index rose 0.1% to 100.218 after reaching a high of 100.574 Wednesday.
--U.S. Treasury yields were stable to lower in Asian trade. The Fed meeting "raises the risk of interest rate hikes later this year, but our base case is still that the FOMC will leave the policy rate unchanged this year," said Goldman Sachs' David Mericle in a note. Nine of 19 officials penciled in at least one rate rise by year-end, up from none in March. The two-year Treasury yield was stable at 4.162%; the 10-year Treasury yield fell 1.6 basis points to 4.446%, while the 30-year yield declined 3.8 basis points to 4.887%, according to Tradeweb.
--Bitcoin dropped 0.6% to $63,997.
--Gold prices fell after the Fed decision offset support from a drop in oil prices that eased concerns over inflation. Higher interest rates raise the opportunity cost of holding non-yielding assets like bullion. In early trading, New York futures were down 1.2% to $4,328.20 a troy ounce, though they remain on track for a weekly gain of 5%. "The contrasting reactions highlight the market's current struggle to balance short-term macro headwinds against longer-term structural support for gold," analysts at Saxo Bank said. However, "with energy prices retreating sharply, it also remains questionable whether the Federal Reserve's 2026 inflation projections will prove too high and require downward revisions in the months ahead."
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
June 18, 2026 04:03 ET (08:03 GMT)
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