Today's Edition
LONDON/SINGAPORE (REUTERS)
Stocks soared, bonds rallied and the dollar languished on Wednesday, as hopes of a de-escalation in the Iran conflict fuelled the biggest rebound in regional equities in more than three years.
Europe's STOXX 600 jumped as much as 2.5% in early trade and was last up 2% - still on track for its biggest daily jump in a year - as travel stocks surged 3.4% and aerospace and defence stocks added 3.9%. German bund yields slipped 5 basis points.
S&P 500 e-mini futures are pointing to more moderate gains of about 0.5%. Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan rose 4.7% - its biggest one-day increase since November 2022.
On Tuesday, US President Donald Trump said the US could end its military attacks on Iran in two to three weeks.
Stocks on Wall Street soared on Tuesday as traders bet on the potential off-ramp to the war, sending the S&P 500 2.9% higher, while oil markets followed through on earlier declines in Asian trading.
Brent crude futures pared some losses and were last 1% lower at $102.94 a barrel, having earlier moved below the $100 mark in volatile trading. Gold was 1% higher at $4,720 per ounce.
Elsewhere, the US dollar index slipped 0.1% to 99.59, extending its biggest one-day drop in two weeks on Tuesday into a second consecutive day of declines, as traders reassessed the odds that the Federal Reserve may resume easing policy earlier than thought. The yield on the US 10-year Treasury bond was down 3.4 basis points at 4.277%.
Fed funds futures are pricing an implied 17.9% chance that a 25-basis-point cut to interest rates could come at the Fed's two-day meeting ending on July 29, up from a 7.5% chance a day earlier, according to the CME Group's FedWatch tool.
Even so, swaps pricing indicates the odds of a cut by April next year are viewed as little better than a coin toss. Traders are awaiting some key economic data releases for an insight into the state of the US economy.
ADP employment numbers for March are due later in the session and will serve as a precursor to Friday's more closely watched non-farm payrolls report. Meanwhile ISM manufacturing numbers for March are due, with RBC Economics expecting an acceleration to 52.6. U.S. retail sales for February will also hit screens.
On Wednesday, a PMI survey showed euro zone manufacturing growth bounced to its strongest in nearly four years in March as supply chain disruptions inflated growth figures. The euro was close to a three-week high versus the dollar, up 0.3% at $1.158.
Some strong economic data in Asia also boosted regional stocks. South Korean stocks logged their strongest day in a month as Samsung Electronics surged 13.5% and SK Hynix gained 11.5%, after exports soared 48.3% in March, smashing market expectations.
A separate purchasing managers' index gauge for South Korea showed the country's factory activity expanded at the strongest pace in more than four years in March, led by chip demand and new product launches, while corresponding measures of factory activity in China cooled.
In cryptocurrencies, bitcoin was up 0.4% at $68,469.85 while ether rose 1.2% to $2,130.41.
