MARKET WRAPS
Stocks:
European shares fell Wednesday as uncertainty over the Iran war persists.
Oil prices increased after Iran attacked U.S. forces after some days without strikes from either side. Brent crude was up 3.8% to around $87 a barrel.
"These developments throw cold water on the idea of a swift de-escalation
in the Persian Gulf," ING said.
Meanwhile, European semiconductor companies fell sharply as AI spending remained in focus.
"The message is clear: investors are no longer rewarding AI exposure by default. They want proof of earnings conversion, margin resilience, and demand durability," said Tickmill Group.
U.S. Markets:
Stock futures were up Wednesday ahead of the Federal Reserve's policy decision.
The Fed is widely expected to hold
the Fed funds rate, but "the bigger story will be the Fed's messaging," Generali Investments said. Policymakers are expected to maintain--or even strengthen-a hawkish tone as persistent inflation, rising oil prices and divisions within the FOMC keep the door open to further tightening later this year, it added.
Currently, the market prices a 31.5% probability of a rate hike and expects the Fed to raise rates by slightly more than 50 bps over the next 12 months, according to LSEG data.
Forex:
The euro rose. The resumption of military strikes in the Iran war is a reminder to remain cautious on the euro versus the dollar, ING said.
The dollar edged lower as investors turned cautious ahead of the Fed's policy decision later.
Sterling rose. The Bank of England is widely expected to leave interest rates unchanged Thursday but the vote split will determine sterling's reaction, Ebury said.
Bonds:
Eurozone government bond yields rose
in early trade, tracking a move higher in Treasury yields following a jump in oil prices.
Treasury yields edged higher as oil rose after Iran launched a ballistic-missile attack on American forces in the Middle East in a sudden escalation after several days without strikes from either side.
Energy:
Oil prices climbed after the U.S. military intercepted Iranian ballistic missiles aimed at American forces in Jordan, a sharp escalation in regional hostilities just as diplomatic efforts had begun to gain momentum.
Metals:
Gold prices ticked higher as investors awaited the Fed's interest-rate decision this week and Chairman Kevin Warsh's remarks.
Copper
Copper fell in early trade. Investors remain concerned about tighter monetary policy, ANZ Research said. Sentiment has also been weighed by the selloff in AI-related stocks, as spending by tech companies on infrastructure has been a key driver of demand for copper, helping to offset signs of rising supply-side issues.
Iron ore
Iron ore futures rose in early trade. Growing disruptions to diesel and gas supplies have raised concerns of tighter supply from iron ore mines in Australia and Brazil, ANZ Research said.
EMEA HEADLINES
BMW to Cut Several Thousand Jobs in Germany via Voluntary Severance Program
BMW is aiming to cut several thousand jobs in Germany via a voluntary severance program, a spokesperson said Wednesday.
The severance program, set to run through the end of next year, will be offered to employees in administrative positions and exclude production jobs.
Glencore's Traders to Report Bumper First-Half
Glencore's commodities traders are set to report a bumper first-half performance while copper production grew, as the commodities giant largely backed its full-year guidance.
Glencore said Wednesday that its marketing division is set to report adjusted earnings before interest and taxes of around $3.3 billion. This compares with the $1.4 billion the unit booked in the same period last year when U.S. tariff policy uncertainty weighed on the macroeconomic environment.
Shares in Gucci Owner Kering Surge as Recovery Gains Traction
Shares in Kering jumped after the French luxury group recorded a rise in revenue, as the group seeks to turn a page after years of weak demand for its upscale brands.
The Gucci owner booked revenue of 3.65 billion euros ($4.16 billion) for the second quarter, a 1% increase compared with the same period last year in reported terms. Excluding currency and portfolio changes, revenue was up 2%.
Chip-Equipment Supplier ASM International Lifts Sales Outlook as AI Fuels Orders
ASM International said it expected sales next year to grow more than previously thought as the race to build artificial-intelligence infrastructure and new devices coming to market fuel demand for chips and the tools needed to make them.
The Dutch group, which supplies chip makers with wafer processing equipment for the deposition of thin films, in September set a 2027 revenue target between 3.7 billion and 4.6 billion euros, equivalent to $4.21 billion to $5.23 billion. It said Tuesday that it expected revenue next year to exceed the top end of that range.
GLOBAL NEWS
Iran Launches Surprise Missile Attack on U.S. Forces
Iran launched a surprise ballistic-missile attack on American forces in Jordan, a U.S. official said, a violent escalation that piles new pressure on President Trump to renew the war in earnest.
The missiles were all successfully intercepted, the U.S. military said. But the assault raised the prospect that American forces would have to respond, just as negotiations to reopen the Strait of Hormuz and eventually jump-start broader peace talks were picking up speed.
A Tired Tech Trade Looks Set to Sink the Stock Market
Markets hate uncertainty, but confusion is the real problem these days. Don't be surprised if the stock market faces further losses into the fall-or at least until the disorientation begins to fade.
For years now, the market has followed a simple narrative: Artificial intelligence would be the next big thing, and stocks benefiting from AI would thrive, while shares of disrupted companies would get hit. That theme helped drive the S&P 500 to an annualized gain of 24% for the three years ended May 31, while the VanEck Semiconductor exchange-traded fund returned 61% annualized and the Invesco S&P 500 Equal Weight ETF rose just 16%. It also helped that the Federal Reserve was expected to lower interest rates, and the economy was expected to boom.
What to Watch for at the Fed Meeting
By the time the Federal Reserve meets, Wall Street usually already knows the outcome. Not this time.
Two weeks ago, the picture pointed toward the central bank extending its hold on interest rates, currently between 3.5% and 3.75%. Remarks from senior officials who have often helped shape expectations had laid out what would push them to raise rates-and June's cooler inflation readings came in below that bar, shifting the debate over a possible rate increase to September.
Iran Launches Surprise Missile Attack on U.S. Forces
Iran launched a surprise ballistic-missile attack on American forces in Jordan, a U.S. official said, a violent escalation that piles new pressure on President Trump to renew the war in earnest.
The missiles were all successfully intercepted, the U.S. military said. But the assault raised the prospect that American forces would have to respond, just as negotiations to reopen the Strait of Hormuz and eventually jump-start broader peace talks were picking up speed.
Japan Quake Leads to Mall Collapse; Death Toll Rises to 13
TOKYO-Rescue operations were under way at a Japanese shopping mall, and more than 200,000 people have been issued evacuation orders in the region after a strong earthquake struck southern Japan on Tuesday.
Prime Minister Sanae Takaichi said Wednesday that 13 people were killed in the quake, with many more injured.
Trump Eulogizes Lindsey Graham as Senate Giant and 'American Original'
WASHINGTON-President Trump called the late Sen. Lindsey Graham "a respected statesman, giant of the United States Senate and true American original" in a speech eulogizing the influential lawmaker at a funeral at the Washington National Cathedral on Tuesday afternoon.
"For more than 30 years, nothing of consequence happened in this capital without Lindsey Graham knowing about it. No bill became law without Lindsey Graham having a say in it," said Trump. "He was a man who gave America the full measure of his good and mighty heart until that heart itself just gave out."
Netanyahu Finds Diminished Welcome From Trump as Iran War Drags On
President Trump and Israeli Prime Minister Benjamin Netanyahu met at the White House Tuesday, navigating a growing rift five months after the two launched a war on Iran that has proven far more complex than either imagined.
Tensions between the two had simmered for weeks. It was unclear until late last week that Trump would even entertain a meeting with Netanyahu. To secure an audience, the Trump administration pressed the Israeli leader to take steps to show he was serious about advancing U.S.-brokered peace talks in Lebanon and Gaza, according to officials and people familiar with the matter.
Write to priscila.barrera@wsj.com
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