US stock futures edged higher on Wednesday, a day after markets recorded their biggest one-day gain in nearly a year, as reports suggested the war with Iran could be nearing an end.
Global shares rose, oil prices declined and the dollar rebounded as signs emerged of a potential easing of hostilities in the Middle East and the possible reopening of key shipping routes.
Oil fell about 3% on Wednesday, while equities gained as diplomatic efforts intensified to secure ceasefire agreements and stabilise geopolitical tensions.
5 things to know before Wall Street opens
1. Futures tied to the S&P 500 rose about 0.5%, while Nasdaq 100 futures advanced roughly 0.6%.
Dow Jones Industrial Average futures climbed 243 points, or 0.5%.
Volatility cooled, with the CBOE Volatility Index falling to its lowest level in over a week as the sharp rally earlier in the week began to stabilise.
2. Comments from US political leaders helped lift sentiment.
President Donald Trump and Secretary of State Marco Rubio said on Tuesday that the conflict with Iran may be nearing an end, potentially paving the way for talks with Iranian leaders and a de-escalation of hostilities.
The White House also said the president would address the nation later in the day, adding to market focus on geopolitical developments.
3. The STOXX 600 index of major European companies climbed 2.2%.
In Asia, South Korea’s Kospi surged as much as 9%, while Japan’s Nikkei 225 rose about 5%, reflecting a broad-based risk-on move across global markets.
Oil prices, however, retreated, with Brent crude trading near $104 a barrel after falling roughly 3%, reversing part of the sharp gains seen during recent geopolitical tensions.
4. US energy stocks declined in premarket trading, with Exxon Mobil and Chevron each falling about 2.5%, making them among the weakest performers.
Market participants remain cautious, with some analysts noting that a swift resolution to the conflict may still be unlikely and that supply risks could persist.
While tensions may ease, uncertainty around the Strait of Hormuz continues to pose a risk, keeping energy prices elevated.
5. Investors are now turning their attention to key US economic data, including private sector payrolls, retail sales and broader business activity indicators due later this week.
Markets will also monitor commentary from Federal Reserve officials for clues on the interest-rate outlook.
US markets will be closed on Friday for Good Friday, though key economic data releases are still expected.
Interest-rate expectations remain uncertain after recent inflation data came in stronger than expected, reducing the likelihood of multiple rate cuts this year.
The broader picture
Despite the recent rebound, US equities remain under pressure.
Major indexes posted their worst monthly performance in a year, with the S&P 500 and Nasdaq each falling more than 5%, while the Dow Jones Industrial Average declined 5.4%.
Traders actively monitoring the price fluctuations on regulated investing apps say risk premiums continue to reflect uncertainty around energy supply disruptions and interest-rate trajectories
Ultimately, the outlook for risk assets will depend on a mix of incoming economic data, Federal Reserve signals, geopolitical developments in the Middle East, and the stability of critical oil supply routes such as the Strait of Hormuz.
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