Global markets mixed amid US-Iran talks, uncertainty over Strait of Hormuz

WASHINGTON (AA) — Global markets are trading mixed as talks to end the U.S.-Israel-Iran war hit a new obstacle and uncertainty over maritime traffic in the Strait of Hormuz weighs on sentiment.

Tehran reportedly will not meet with high-level US envoys visiting the region due to a significant disagreement over a framework to fully reopen the strait. Oil markets are priced under the assumption that supply will gradually normalize, but traffic through the waterway has yet to reach pre-war levels.

The near-certainty of Fed rate hikes this year is adding to caution. Cleveland Fed president Beth Hammack said demand for artificial intelligence infrastructure could fuel inflation, necessitating hikes. Fed Chair Kevin Warsh’s statements on Wednesday will be closely watched, though he is expected to refrain from forward guidance.

Earnings season is approaching, and companies are expected to post strong results that could offset selling pressure from geopolitical tensions and rate concerns.

US JOLTS job openings rose to nearly 7.6 million in May, above estimates, while hires fell 45,000 to roughly 5.2 million. 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 expectations.

Meanwhile, AI startup Anthropic said Washington lifted export controls on its state-of-the-art AI models, Claude Fable 5 and Mythos 5.

The U.S. 10-year Treasury yield rose 10 basis points on Tuesday to 4.47% on rate hike expectations and is trading flat on Wednesday. The US Dollar Index is up 0.1% at 101.3. Gold is down 0.7% at $3,980 per ounce, while Brent crude oil is at $73.2 per barrel, down 0.3%.

The New York Stock Exchange traded higher on Tuesday amid a tech rally. Nvidia, AMD, and Intel rose 2.63%, 7.68%, and 6.01%, respectively. The Dow Jones gained 0.26%, the S&P 500 0.79%, and the Nasdaq 1.52%. The S&P 500 and the Nasdaq posted their strongest quarterly performances since 2020 despite the Middle East conflict. American indexes opened Wednesday in negative territory.

Europe

European stock markets also traded positively on Tuesday on renewed tech optimism. Analysts say investors seeking to diversify away from major U.S. tech firms could increasingly benefit European markets.

German Bundesbank president Joachim Nagel, speaking at the European Central Bank forum in Portugal, said the effects of the energy shock persist and inflation will continue above target despite efforts to end the war, according to CNBC. Eurozone inflation data is scheduled for release on Wednesday.

Germany’s import price index rose 6.8% year-on-year in May, led by rising energy costs — the highest increase in three and a half years. Germany’s unemployment rate came in at 6.3% in June, within estimates.

The U.K.’s first-quarter GDP grew 0.6% on a quarterly basis, meeting estimates, while rising 0.9% year-on-year, below expectations. It marked the first time since the second quarter of 2024 that UK growth fell below 1%.

The 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 mixed.

Asia

Asian stock markets traded positively near the close on Wednesday, except for South Korea.

Japan’s manufacturing PMI stood at 54.8 in June, while China’s came in at 51.7. Japan’s second-quarter Tankan All Big Industry CAPEX rose 11.5%, above estimates.

The U.S. dollar/Japanese yen exchange rate is trading at 162.8, its lowest in 40 years. Japanese policymakers are expected to intervene in the forex market. Falling oil prices are benefiting Japan as an energy importer, while its potential in AI investment and the Bank of Japan’s room to act without stifling growth contribute to forecasts of a medium-term economic normalization.

Near the close, Japan’s Nikkei 225 gained 0.6% and China’s Shanghai Composite Index 1.1%, while South Korea’s Kospi fell 0.8%.