Markets start the quarter on a softer note
Global equities edged lower Wednesday as investors assessed comments from Federal Reserve Chair Kevin Warsh, falling oil prices and renewed attention on the Japanese yen.
MSCI’s global stock gauge slipped 0.22% to 1,117.95, while U.S. and European shares also finished weaker.
Warsh keeps focus on inflation target
Speaking at a central banking panel in Sintra, Portugal, Warsh said inflation expectations and inflation risks had declined in recent weeks.
Even so, he made clear that the Federal Reserve remains committed to its 2% inflation target and would “disappoint” anyone expecting loose monetary policy.
Dollar holds firm despite Fed comments
The dollar remained supported by expectations that the Fed could still raise rates this year, even though Warsh’s comments added some pressure to the currency.
The dollar index rose 0.17% to 101.41. The euro fell 0.39% to $1.1376, while the yen ended roughly flat against the dollar after earlier touching fresh 40-year lows.
Yen intervention risk remains in focus
Traders continued to watch for possible action from Japanese authorities after the yen’s latest slide against the dollar.
The currency recovered later in the session, but its move to a new four-decade low kept intervention speculation alive.
Analysts see room for patience
Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank’s New York branch, said current data do not suggest a rapidly worsening imbalance.
“Nothing that we see suggests that any imbalance either on the activity side or the inflation side is growing rapidly,” Englander said.
“You can afford to wait and see how these longer-term technological trends play out,” he added. “What we do see is that unit labor costs are very, very soft, and ultimately that’s what the Fed controls.”
Jobs data comes into view
Interest rate futures imply no Fed move at the meeting later this month, while a September rate hike remains priced in.
Investors are now waiting for Thursday’s employment report, which is expected to show that U.S. employers added 110,000 jobs in June and that the unemployment rate stayed at 4.3%.
Private payroll data released Wednesday showed employment rising by 98,000 jobs in June, below economists’ forecast of 118,000.
Wall Street closes lower
The Dow Jones Industrial Average fell 13.96 points, or 0.03%, to 52,305.24.
The S&P 500 declined 16.13 points, or 0.22%, to 7,483.23, while the Nasdaq Composite lost 173.69 points, or 0.66%, to 26,040.03.
Europe and emerging markets retreat
In Europe, the STOXX 600 fell 0.38% and the FTSEurofirst 300 dropped 11.45 points, or 0.45%.
Emerging market stocks also slipped, falling 0.96 point, or 0.06%, to 1,721.93.
Asia reflects post-rally caution
Japan’s Nikkei gained 0.6% after surging 37% in the previous quarter.
South Korea’s main index fell about 2%, following a 68% quarterly rally fueled by demand for AI-related chips.
Oil drops as supply fears ease
Oil prices declined as optimism around U.S.-Iran talks reduced concerns about supply disruptions.
“There’s more optimism as more oil goes through the Strait of Hormuz,” said Phil Flynn, senior analyst for Price Futures Group. “The market is signalling that once we get past this, the gloves are going to come off and we’re going to probably produce more oil in the world than we ever have.”
Crude prices fall sharply
U.S. crude fell 2.03% to $68.09 a barrel. Brent dropped 2.44% to $71.17 per barrel.
Despite steep declines in the previous quarter, both benchmarks remain up almost 20% so far this year.
Analysts have reduced their 2026 oil price forecasts for the first time since the Iran war began, as the reopening of the Strait of Hormuz eased fears of prolonged supply disruption.
