By Dow Jones Newswires Staff


Oil prices pared some gains in early European trade, but remained above pre-war levels after the U.S. and Iran exchanged fire again, hours after President Trump declared an end to the eight-week ceasefire.

U.S. forces struck 90 military targets including missile and drone sites near the Strait of Hormuz, U.S. Central Command said, while Iran fired on U.S. bases in Bahrain and Kuwait. President Trump said that Iran called him in search of a deal, though Tehran didn't say anything about new talks.

Despite the escalation, U.S. stock futures are in the green following a cautious recovery in Asian tech stocks, while U.S. Treasurys stabilized after first weakening following Trump's comments Wednesday.

The dollar edged lower on hopes the Federal Reserve's stance is less hawkish than previously feared, though the reaction to minutes from the Fed's last rate-setting meeting was split among analysts.

For the day ahead, investors watch for European Central Bank's account of its last meeting, as well as weekly U.S. initial jobless claims data.


--Oil prices edged lower after rising earlier in the session, with Brent crude down 0.2% to $77.85 a barrel and WTI futures slipping 0.3% to $73.30 a barrel. The renewed escalation threatened to slow Gulf producers' efforts to restore output and undermine confidence in shipping through the Strait of Hormuz, where traffic had recently begun to recover. "The past few days' price action makes one thing clear: markets were far too relaxed about the risks surrounding the deal - and far too bullish on how quickly regional supply could rebound," analysts at ING said. Adding to supply concerns--particularly in middle distillates--Russia announced a ban on diesel exports until the end of July in response to domestic fuel shortages following continued Ukrainian drone attacks on refinery infrastructure.


--In the U.S., futures for the S&P 500 were up 0.3%, while the Dow Jones Industrial Average climbed 0.15%. Nasdaq futures climbed 0.6%. Chip makers point to a recovery after-hours following days of volatile trade, with Micron Technology and Intel gaining 3.4% and 3.6%.


--Asian equities were mixed, and oil wavered on Thursday after fresh U.S. strikes on Iran renewed concerns over supply disruptions in the Middle East. South Korea and Japan both ended higher after the recent heavy selloff. The Kospi gained 0.6% and the Nikkei Stock Average rose 1.4%. China's Shanghai Composite Index added 1.65%, while Hong Kong's Hang Seng Index shed 0.6%. The city welcomed Apple supplier Luxshare Precision Industry's trading debut today, which marked Hong Kong's largest IPO so far this year. However, Luxshare had a tepid debut, with its shares down 3.5% recently. Oil futures erased earlier gains in the afternoon.


--European blue-chip indexes were mostly higher, as banks and AI-related stocks recover. The Stoxx 600 rose 0.7%. The French CAC 40 was 0.6% higher, led by chip maker STMicroelectronics, which rose 3.7%, while luxury companies and banks gained. Germany's DAX was up 0.7%, with Infineon up 3.1%, while Siemens Energy gained 2.5%. Italy's FTSE MIB rose 0.9%, while the Spanish IBEX 35 added 1% after tumbling 2.7% in the last session. The semiconductor-heavy AEX gained 0.7% in Amsterdam, with ASML gaining 2.5%. London's FTSE 100 was an outlier, falling 0.4% as AstraZeneca dropped 9% after the company said a drug trial missed its objective.


--The U.S. dollar eased after the Federal Reserve's latest meeting minutes showed policymakers were divided over the future path of interest rates. The minutes were more balanced than the "hawkish interpretation" of the June press conference, which boosted expectations for rate rises, Jefferies economist Mohit Kumar said in a note. Many Fed policymakers saw price pressures easing over the medium-term and policy rates could be held steady or gradually reduced, he said. "Our view remains that as long as oil prices don't flare up significantly, we do not see a hike from the Fed this year and still expect the next move to be a cut (potentially next year)." The DXY dollar index fell 0.2% to 100.817.


--U.S. Treasury yields looked to stabilize in Asian trade after hitting multiweek highs Wednesday, prompted by President Trump's announcement that the ceasefire with Iran was over. "Markets have, however, seemingly stabilized for now, with Brent oil hovering around $79 per barrel and U.S. yields and German bond futures are moving sideways in Asia overnight," Danske Bank analyst August Hyldgaard said. The 10-year Treasury yield last traded 0.2 bps higher at 4.567%, below Wednesday's intraday high of 4.597%.


--Yields on eurozone government bonds and U.K. government bonds fell, reversing some of their steep rise the previous day as oil prices turn lower. Ten-year German Bund yields fell 1.8 basis points to last trade at 3.067%, while ten-year gilt yields fell 3.1 bps to 4.935%.


--Bitcoin rose 1.2% to $62,819.


--Gold prices climbed back above $4,100 a troy ounce after Wednesday's selloff, with New York futures up 0.6% to $4,107.90. The rebound was supported by a softer U.S. dollar and renewed geopolitical tensions in the Middle East after the U.S. and Iran exchanged strikes again on Wednesday. Still, higher energy prices could complicate the inflation outlook, reinforcing expectations that the Federal Reserve will keep rates higher for longer or increase them further. Minutes from the Fed's mid-June policy meeting underscored a hawkish shift across the committee, weighing on the non-yielding metal.


Write to Barcelona Editors at barcelonaeditors@dowjones.com


(END) Dow Jones Newswires

07-09-26 0432ET