European stocks opened slightly higher on Wednesday as investors focused on the escalating conflict in the Middle East. Meanwhile, oil prices remained elevated, reflecting ongoing geopolitical tensions.
The U.S. benchmark West Texas Intermediate (WTI) crude oil price dipped about 0.43% to $74.52 a barrel. Brent crude, the international standard, fell around 0.52% to $76.05 a barrel. Despite the small drops, both prices stayed near their monthly highs.
Oil prices surged more than 4% on Tuesday after U.S. President Donald Trump abruptly left the Group of Seven summit in Canada. He warned residents in Tehran to evacuate immediately, signaling rising tensions with Iran.
Tensions Between Iran and Israel Escalate
In just hours, Trump’s stance shifted from suggesting the Iran nuclear deal was “workable” to urging Tehran’s 9.5 million people to flee for their safety. Iran and Israel exchanged air strikes again on Wednesday, raising fears of further conflict.
Iran’s strategic location near the Strait of Hormuz — a vital passage for most global oil shipments — makes the conflict a key factor driving oil prices higher. Past clashes in this region have caused price spikes, though those conflicts were typically short-lived and did not disrupt oil flows.
Mixed Early Trading in Global Stock Markets
In Europe, stock indices showed modest gains in early trading. Germany’s DAX 40 rose 0.11% to 23,461.41 points. France’s CAC 40 increased by 0.29% to 7,706.08 points. The broader Stoxx 600 index was nearly flat, while the UK’s FTSE 100 gained 0.23% to 8,854.79 points.
Asian markets showed mixed results earlier Wednesday. Japan’s Nikkei 225 climbed 0.78% to 38,837.48 points. Hong Kong’s Hang Seng dropped 1.17% to 23,698.65 points. China’s Shanghai Composite rose 0.3% to 3,388.77 points. South Korea’s Kospi index gained 0.54% to 2,966.20 points, while Australia’s S&P/ASX 200 fell 0.1% to 8,533.10 points.
U.S. Stocks Fell Amid Rising Oil Prices and Weak Retail Data
On Tuesday, U.S. markets fell sharply. The S&P 500 dropped 0.84% to 5,982.72 points. The Dow Jones Industrial Average lost 0.7% to 42,215.80 points. The Nasdaq Composite declined 0.91% to 19,521.09 points.
The declines followed a surge in oil prices and weaker-than-expected U.S. retail sales data for May. President Trump intensified tensions on social media, calling on Israel to “surrender unconditionally” and warning he would not kill Iranian leaders “at least not yet.”
Markets Await Federal Reserve Interest Rate Decision
On Wednesday morning, futures markets showed slight gains: S&P 500 futures rose 0.11% to 5,991.50 points; Dow futures increased by less than 1% to 42,245 points; and Nasdaq futures rose 0.13% to 21,759 points.
Investors are closely watching the Federal Reserve’s interest rate decision later today. Most economists and traders expect the Fed will hold rates steady.
Currency Markets See Modest Moves
In early foreign exchange trading, the U.S. dollar weakened 0.2% against the Japanese yen, trading at 144.94 yen. The euro strengthened slightly against the dollar, rising 0.18% to $1.1502.
