North America’s main stock index opened little changed on Wednesday as investors awaited details of a U.S.-Iran peace agreement and the Federal Reserve’s rate decision under new chair Kevin Warsh.
At 9:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index was down 0.07 per cent at 35,364.45 points.
In New York, the Dow Jones Industrial Average rose 11.12 points, or 0.02 per cent, to 52,010.79, the S&P 500 gained 8.44 points, or 0.11 per cent, to 7,519.79 and the Nasdaq Composite gained 113.22 points, or 0.43 per cent, to 26,489.56.
Shares of richly valued chipmakers, including Broadcom, Micron Technology, Advanced Micro Devices and Intel, rose between 2.8 per cent and 3.4 per cent in early trading, recovering from Tuesday’s drop.
U.S. stocks have been choppy after a sharp rally on Monday when President Donald Trump announced a preliminary U.S.-Iran peace deal, which sent oil prices tumbling and eased inflation fears.
Investors’ focus is now on the Federal Reserve’s monetary policy decision, set to be released at 2:00 p.m. ET on Wednesday.
Policymakers are widely expected to hold interest rates unchanged at the 3.50-3.75-per-cent range as they wrestle with inflation pressures from higher oil prices fueled by the Middle East war.
Investors will also keep a close watch on the new Fed chair’s first press conference for his views on inflation, unemployment and the economic outlook.
The 10-year Treasury yield, the benchmark for global borrowing costs, edged higher to 4.43 per cent.
“The last thing that Warsh wants to do is send the 10-year yield sharply higher. It’s really important for markets for the 10-year yield to stay below 4.5, especially now that oil prices are lower,” said Jeff Buchbinder, chief equity strategist at LPL Financial.
“So don’t expect any fast moves along those lines. And of course, he has to get the buy-in from the committee. So that will be a very long, drawn-out process.”
Data showed U.S. retail sales increased more than expected in May, but a slowdown is likely as the cushion that consumers had from larger tax refunds depletes due to rising costs.
Retail sales jumped 0.9 per cent last month after a downwardly revised 0.4-per-cent gain in April, the Commerce Department’s Census Bureau said, compared with economists’ forecast of a rise of 0.5 per cent.
Traders see the Fed holding rates through much of the year, but are betting on a nearly 43-per-cent chance of a 25-basis-point rate hike in December, according to CME Group’s FedWatch tool.
U.S. stocks have recovered from much of the early June slump, with the blue-chip Dow touching record highs for the past two consecutive sessions, as a resilient U.S. economy, broadening of the rally beyond tech shares and falling oil prices aided sentiment.
Oil prices hovered near a three-month low, fueled by hopes that the interim peace deal between the United States and Iran would allow oil to leave the Gulf through the crucial Strait of Hormuz.
The memorandum of understanding, not yet public, extends by another 60 days a tenuous ceasefire agreed in April, to allow room for talks toward a permanent truce.
Still, some uncertainty lingered after Trump said the Iran memorandum of understanding was not final, and he could resume bombing if he did not like it.
Shares of Elon Musk’s AI and rocket company SpaceX rose 3.8 per cent after surpassing Amazon’s market value on Tuesday to become the fifth most valuable company.
In early European trading, Britain’s FTSE 100 was unchanged following official data that showed U.K. inflation was steady in May at 2.8 per cent even as fuel prices increased. Germany’s DAX was also flat, while France’s CAC 40 rose 0.2 per cent.
Asian stocks were mostly higher with markets in Japan and South Korea setting new records. Tokyo’s Nikkei 225 gained 0.7 per cent to 69,902.25, after reaching an intraday high of 70,125.75 following news that Japan’s exports jumped 17 per cent in May from a year earlier, helped in part by strong demand for high-tech products.
South Korea’s Kospi gained 1.6 per cent to 8,864.24, also closing at another all-time high, with big technology stocks climbing despite a sell-off of artificial intelligence-related shares on Wall Street. Samsung Electronics, the country’s most valuable company, was up 1 per cent. Chipmaker SK Hynix jumped 5.8 per cent.
Hong Kong’s Hang Seng lost 0.7 per cent to 24,312.16, while the Shanghai Composite index rose 0.4 per cent to 4,108.08.
Australia’s S&P/ASX 200 climbed 0.5 per cent to 8,966.30.
Taiwan’s Taiex added 0.2 per cent and India’s Sensex rose 0.3 per cent.
Reuters and The Associated Press