MARKET WRAPS
Stocks:
European shares edged lower Wednesday as attention turns to the Federal Reserve interest-rates decision and Kevin Warsh's first press conference as chairman .
Brent crude dropped further below $80 a barrel ahead of Friday's expected signing of an interim U.S.-Iran peace agreement. Investors are still awaiting more clarity on the deal.
With the Fed broadly expected to leave policy rates unchanged at 1800 GMT today, the focus is on Warsh's remarks.
"His first steps in office and his initial statements will be closely watched, as transitional periods within the world's most powerful monetary institution are typically a source of stress for capital markets , " Natixis IM said.
Commerzbank said Warsh was unlikely to position himself strongly against the Fed
in his first meeting as chairman by voting for a rate cut straight away.
Deutsche Bank said Warsh was likely to lean toward the center by not arguing for rate cuts or ruling out rate rises either .
"Investors are now almost evenly split between the prospect of further tightening and that of policy easing, effectively pricing a steady Fed through year-end," Carmignac said.
In the U.K., inflation in May was unexpectedly flat , reinforcing the view that the Bank of England will hold rates Thursday.
An inflation peak of well below 4%
is becoming increasingly plausible, The Institute of Chartered Accountants in England and Wales said.
Meanwhile, the G7 summit concludes today.
Stocks to Watch
BMW
slashed guidance due to a deteriorating Chinese market and the spillover effects of the Middle East conflict.
Lowering its target price on the stock, Deutsche Bank said the automaker was expected to revise its guidance, but the magnitude of the cut was larger than expected .
European auto shares were dragged lower .
Shares on the Move
Energy stocks in Europe opened lower
as oil prices continued to slide ahead of the planned signing of a U.S.-Iran deal on Friday that is expected to resume flows through the Strait of Hormuz.
U.S. Markets:
Stock futures were higher, led by contracts tied to the Nasdaq, as tech looked poised to rebound.
SpaceX was rising again premarket after ending Tuesday 4.8% higher, its market capitalization surpassing Amazon's.
While the Fed decision steals focus, investors will also keep an eye on retail sales out today.
Forex:
The dollar traded steady.
Commerzbank said the decisive factor for the greenback from the Fed meeting was whether Warsh describes the energy price shock as temporary and leaves market expectations for future rate rises looking unjustified.
Sterling fell to its lowest in nearly two weeks against the euro after the flat U.K. inflation reading.
For the BOE, the data "reduces some of the urgency"
surrounding the potential need to raise interest rates, Capital dot com said.
Bonds:
Eurozone government bond yields fell in response to weaker-than-expected U.K. inflation data .
Gilt yields also dropped, taking the 10-year yield to its lowest in two months, following the data.
Energy:
Brent crude fell below $80 a barrel after reports that the deal between Washington and Tehran included waivers of sanctions on Iranian oil sales.
The U.S. will allow Iran to start selling oil and fuel
once the deal to end the conflict is signed on Friday, The Wall Street Journal reported.
Metals:
Gold prices were largely unchanged early Wednesday.
Easing inflationary pressures would typically weigh on non-yielding assets like gold but the precious metal is supported by lingering geopolitical uncertainty and cautious investor sentiment , MUFG said.
Copper
LME three-month copper was higher. Demand is likely to be supported by AI-driven data center expansion , BofA Securities said.
EMEA HEADLINES
European Auto Shares Fall After BMW Cuts Guidance
European auto shares fell Wednesday, dragged lower after BMW slashed guidance due to a deteriorating Chinese market and the spillover effects of the Middle East conflict.
In a statement after market close Tuesday, the German automaker said the Chinese car market worsened in the second quarter, driving intensified competition that has spilled over into the broader Asia-Pacific region. Lower sales in the region have offset higher volumes in Europe and the U.S., it said.
Straumann Shares Climb After Lower-Than-Expected Tariffs Boost Outlook
Straumann Holding shares traded higher after the Swiss dental-implant company raised its profitability outlook for the year citing lower-than-anticipated tariffs and cost savings.
Shares in Straumann were up 9.7% in European morning trading, having been broadly flat since the start of the year through Tuesday's close.
ECB's Tracker Continues to Point to Slower Wage Growth
Eurozone wage growth shows no sign of picking up in response to the rise in energy prices that has accompanied the conflict in the Middle East, according to figures released Wednesday by the European Central Bank.
A tracker of pay deals negotiated by labor unions and similar groups of workers indicates that wages are set to rise by 2.6% this year, having increased by 3% in 2025. The 2026 figure is unchanged from earlier estimates.
Oil Supply to Rebound Strongly After Gulf Shock But Recovery Will Take Months, IEA Says
The Gulf oil supply shock is set to drag global oil demand sharply lower before flows through the Strait of Hormuz gradually normalize, with supply expected to rebound to 8 million barrels a day in 2027, the International Energy Agency said.
While the U.S.-Iran interim deal set to be signed this week marks the most significant breakthrough in negotiations since the start of the war, a full recovery of flows through the vital Strait of Hormuz waterway is expected to take months, according to the Paris-based energy watchdog.
U.K. Inflation Remains Unexpectedly Flat Ahead of Bank of England Meeting
The U.K.'s rate of inflation was unchanged in May, defying expectations of an increase and reinforcing the view that the Bank of England will keep interest rates on hold at its meeting Thursday.
The annual rate of inflation came in at 2.8%, the same as in April, the Office for National Statistics said Wednesday. A consensus of economists polled last week by The Wall Street Journal expected May's rate instead to climb to 3.0%.
Sweden's Central Bank Holds Key Rate, Sees Higher Chance of a Hike Later This Year
STOCKHOLM-Sweden's central bank held its key policy rate at 1.75% but said the probability of a rate hike later this year has increased as the fallout from the Middle East conflict risks pushing inflation higher.
The decision to keep its rate unchanged was in line with a Wall Street Journal poll.
GLOBAL NEWS
Trump Picked Warsh to Cut Rates. His Committee Is Talking About Hikes.
Kevin Warsh walks into his first meeting as Federal Reserve chairman this week in an awkward spot. He argued last year for interest-rate cuts and was chosen to deliver them. But the conversation at the Fed has shifted the other way-toward raising rates, not cutting them.
When President Trump picked Warsh in January, the Fed looked headed for lower rates-and the cheaper mortgages and loans that come with them. Investors expected several cuts this year, on top of three in late 2025, thanks in part to a wobbly job market that left officials worried that high rates were doing more harm than good. Inflation, meanwhile, looked like it might resume a decline toward the Fed's 2% goal once the effects of tariffs faded.
China Moves to Boost the Use of Yuan Globally
Chinese authorities rolled out more measures to promote the use of the yuan globally, their latest effort to build more resilient financial infrastructure to shield its economy from external shocks.
Pan Gongsheng, head of the People's Bank of China, announced Wednesday that Beijing will set up a new repo facility. This facility will let foreign monetary authorities, including sovereign-wealth funds, obtain yuan liquidity from the Chinese central bank with bonds as collateral.
Iran Is Returning to Nuclear Talks No Longer Afraid of America
After more than three months of bombing and blockades, the U.S. and Iran are back to square one, preparing for what promises to be difficult negotiations over limits to Tehran's nuclear ambitions.
This time, the Iranians will come to the table armed with valuable knowledge: They can survive the worst the Americans can throw at them.
Xi's Enforcers Are Hunting Down Officials Who Consult Mystics and Borrow Too Much
Chinese leader Xi Jinping has escalated his fight against corruption into a ruthless campaign to enforce political loyalty.
Communist Party enforcers punished nearly a million people in 2025, the highest number on record and more than five times that reported when Xi took power. The Wall Street Journal reviewed disciplinary statements on more than 940 officials punished under Xi, published by the party's top internal watchdog from 2013 to this May.
Write to gareth.mcpherson@wsj.com
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
June 17, 2026 05:02 ET (09:02 GMT)
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