BANGKOK – European shares slipped and Asian benchmarks advanced on Wednesday as a fragile truce between Israel and Iran appeared to be holding.
Oil prices rebounded slightly after falling about 6% on Tuesday on hopes that the brief war will not hinder the global flow of crude.
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U.S. benchmark crude gained 1.3% to $65.20 per barrel, while Brent crude, the international standard, climbed 1.1% to $66.92.
Lower oil prices could give the Federal Reserve leeway to cut interest rates to help the U.S. economy. Its chair, Jerome Powell, said Tuesday the central bank is waiting to see how the economy evolves before deciding whether to reduce its key interest rate, a stance directly at odds with President Donald Trump’s calls for immediate cuts.
“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said in testimony Tuesday before the House Financial Services Committee.
In early European share trading, Germany's DAX fell 0.4%, giving up early gains, to 23,540.08 and the CAC 40 in Paris shed 0.2% to 7,603.30. Britain's FTSE 100 was flat at 8,758.48, while U.S. futures were little changed.
Shares advanced in Asia, where Tokyo's Nikkei 225 picked up 0.4% to 38,942.07.
The Hang Seng in Hong Kong advanced 1.2% to 24,474.67 and the Shanghai Composite index jumped 1% to 3,455.97.
“The world can now move on to face other difficult choices like tariffs and things like that. So I think the market is well on its way to rebound and could again reach new levels,” said Frances Lun, CEO of GEO Securities in Hong Kong.
In South Korea, the Kospi edged less than 0.1% higher to 3,108.25, while Australia's S&P/ASX 200 also was barely changed, at 8,559.20.
Taiwan's Taiex gained 1.1% and the Sensex in India was up 0.8%. In Bangkok, the SET added 0.3% after the Thai central bank opted to keep its key interest rate unchanged.
On Tuesday, the S&P 500 climbed 1.1%, following up on big gains for stocks across Europe and Asia, after Trump said late Monday that Israel and Iran had agreed to a “complete and total ceasefire.” The main measure of Wall Street’s health is back within 0.8% of its record set in February after falling roughly 20% below during the spring.
The Dow Jones Industrial Average jumped 1.2% and the Nasdaq composite rallied 1.4%.
The fear throughout the Israel-Iran conflict has been that it could squeeze the world’s supply of oil, which would pump up prices for gasoline and hurt the global economy. Iran is a major producer of crude, and it could also try to block the Strait of Hormuz off its coast, through which 20% of the world’s daily oil needs passes on ships.
Now, oil prices have dropped so much in the last two days that they’re near where they were before the fighting began nearly two weeks ago.
With the global oil market well supplied and the OPEC+ alliance of producing countries steadily increasing production, oil prices could be headed even lower as long as the ceasefire holds and a lasting peace solution can be found.
“Easing stress in energy markets is excellent news for everyone who doesn’t want to see higher oil prices translating into accelerating inflation and tighter monetary policy. So the market mood is restored,” Ipek Ozkardeskaya, a senior analyst with Swissquote Bank, said in a commentary.
The Fed has said repeatedly that it wants to wait and see how much higher tariffs imposed by Trump will hurt the U.S. economy and raise inflation before committing to its next move. So far, the economy seems to be holding up OK, though a report on confidence among U.S. consumers came in weaker than economists expected on Tuesday, and inflation has remained only a bit above the Fed’s 2% target.
In currency dealings, the U.S. dollar rose to 145.64 Japanese yen from 144.93 yen. The euro climbed to $1.1600 from $1.1610.
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Video journalist Alice Feng in Hong Kong and AP Business Writer Stan Choe in New York contributed.