Global markets are trading mixed during the ongoing talks between the parties to end the US-Israel-Iran war and uncertainties over maritime traffic in the Strait of Hormuz, keeping investors cautious ahead of new obstacles in diplomatic negotiations.
Tehran reportedly will not meet with high-level US envoys visiting the region due to a significant disagreement between the sides over a framework to fully reopen the Strait of Hormuz, easing risk appetite in global markets.
The Fed's near-certainty of hiking rates this year is also dampening risk appetite. Fed Chair Kevin Warsh's statements will be the focus of the markets on Wednesday, but he's expected to refrain from providing future guidance.
With earnings season right around the corner, companies are expected to post strong financial results, potentially offsetting the selling pressure in the markets that geopolitical tensions and concerns over rate hikes are causing.
Cleveland Fed president Beth Hammack said the demand for artificial intelligence (AI) infrastructure could fuel inflation, necessitating rate hikes.
The US JOLTS job openings rose to nearly 7.6 million in May, above estimates, while the number of hires fell 45,000 to nearly 5.2 million during the same period.
The number of people leaving their jobs, including resignations and layoffs, rose by 63,000 to 5.1 million.
The Conference Board's Consumer Confidence index rose to 91.2 in June amid falling oil prices, below estimates.
Meanwhile, AI startup Anthropic said Washington lifted export controls on its state-of-the-art AI models, Claude Fable 5 and Mythos 5.
The US 10-Year Treasury yield rose 10 basis points on Tuesday to 4.47% amid rate hike expectations, while it's trading flat on Wednesday at 4.47%. The US Dollar Index is up 0.1% at 101.3 on the same day.
Gold is trading down 0.7% at $3,980 per ounce on Wednesday, while Brent crude oil is trading at $73.2 per barrel, down 0.3%.
Oil markets are priced under the assumption that supply will gradually return to normal but the traffic via the Strait of Hormuz has yet to reach pre-war levels, analysts say.
The New York Stock Exchange traded higher on Tuesday amid tech rally.
Shares of US chipmakers Nvidia, AMD, and Intel rose 2.63%, 7.68%, and 6.01%, respectively.
The Dow Jones rose 0.26%, the S&P 500 0.79%, and the Nasdaq 1.52% on Tuesday. The S&P 500 and the Nasdaq saw their strongest quarterly performances since 2020 despite the Middle East conflict, while American indexes started Wednesday in negative.
European stock markets also traded positively on Tuesday due to renewed optimism in the tech sector.
Analysts say that with investors seeking to diversify their investments and shifting away from major US tech firms, European markets could benefit greatly from this transition.
German Bundesbank president Joachim Nagel, speaking at the European Central Bank (ECB) forum held in Portugal, said the effects of the energy shock persists and inflation will continue to remain above target despite efforts to end the war, according to CNBC.
The eurozone's inflation data is scheduled to be released on Wednesday.
Germany's import price index rose 6.8% year-on-year in May, led by rising energy costs. The surge marked the highest increase in three and a half years.
The UK's gross domestic product (GDP) in the first quarter grew 0.6% on a quarterly basis, meeting estimates, while rising 0.9% year-on-year, below expectations. This marked the first time since the second quarter of 2024 that the UK economy grew below 1%.
Germany's unemployment rate came in at 6.3% in June, within estimates.
The UK's FTSE 100 gained 0.12%, Italy's FTSE MIB 30 1.01%, and Germany's DAX 40 1.5%, while France's CAC 40 fell 0.55% on Tuesday. European indexes opened Wednesday on a mixed trend.
Meanwhile, Asian stock markets traded positively near the close on Wednesday except for South Korea.
Japan's manufacturing Purchasing Managers' Index (PMI) stood at 54.8 in June, while China's manufacturing PMI for the same month came in at 51.7, according to data released on Wednesday.
Japan's second-quarter Tankan All Big Industry CAPEX rose 11.5%, above estimates.
The US dollar/Japanese yen exchange rate is trading at 162.8, its lowest in the past 40 years. Japanese policymakers are expected to intervene in the forex market.
Falling oil prices to pre-war levels are benefiting Japan as an energy importer, providing an advantage to its markets, while its potential in AI investments and the Bank of Japan's ability to implement policy without stifling growth or accelerating inflation contribute to the forecasts that its economy could return to normal in the medium term.
Analysts say that Japan's economic admin is combating inflation by utilizing fiscal stimulus and growth potential.
Near the close, Japan's Nikkei 225 gained 0.6% and China's Shanghai Composite Index 1.1%, while South Korea's Kospi Index fell 0.8%.
