Oil Gains, Chip Stocks Extend Losses Ahead of Fed Decision Day

By Dow Jones Newswires Staff

Oil prices jumped and a rotation out of chip stocks gathered pace in early European trade, ahead of the Federal Reserve's interest-rate decision later Wednesday.

Brent crude oil rose above $87 a barrel after a surprise Iranian attack on American forces in Jordan, knocking fragile investor faith in peace talks. U.S. Treasury yields rose in response to the escalation.

The dollar weakened as investors positioned ahead of the Fed's decision. Markets are largely expecting rates to be held this month, with a rate hike penciled in for September, though renewed U.S.-Iran hostilities could justify Fed governors raising rates now.

U.S. stock futures largely moved higher, though Sandisk and Micron Technology fell premarket as investor enthusiasm around semiconductor companies continued to wane. Record profits weren't enough to stop the selloff in South Korean chip maker SK Hynix stock, as European semiconductor companies also fell sharply.

Artificial-intelligence spending will be in focus for investors watching earnings from Microsoft and Meta after the U.S. market close.

--In early European trading, front-month Brent crude was up 3.7% to $87.17 a barrel, while WTI futures rose 3.6% to $82.12 a barrel. Shortly after the surprise Iranian strikes, the U.S. and Saudi Arabia launched strikes in Iraq against Iran-backed groups. "These developments throw cold water on the idea of a swift de-escalation in the Persian Gulf," analysts at ING said. "Clearly, with Saudi oil infrastructure increasingly targeted, the risk of more prolonged supply disruptions grows." Meanwhile, tanker traffic through the Strait of Hormuz remains essentially halted.

--In the U.S., futures for the SP 500 were up 0.2% and futures for the Dow Jones Industrial Average nudged up 0.1%. Nasdaq futures were flat.

--Asian equity markets were mostly higher Wednesday, as investors looked for opportunities following steep overnight losses. South Korea's Kospi was up 0.6% after swinging between gains and losses. Hong Kong's Hang Seng Index gained 0.7%, Singapore's FTSE Straits Times Index added 0.3%, while Japan's Nikkei Stock Average was flat.

--European stock indexes were largely higher in resilient early trade. Strong earnings prints and investor rotation into defensive sectors helped the Europe-wide Stoxx 600 rise 0.3%, even as a semiconductor-led selloff continued. London's FTSE 100 was 0.55% higher as rising oil prices buoy Shell and BP. The CAC 40 added 0.5% in Paris, where Kering leapt 11% after earnings, helping the broader luxury sector. The Italian FTSE MIB gained 0.7%. Germany's DAX rose 0.3%, led by a 5.3% gain for Deutsche Bank after it announced a new buyback. The Dutch AEX edged up 0.05% amid broad tech weakness with ASM International losing 6.6%, though chemicals group IMCD jumped 9%. Spain's IBEX 35 was 0.65% lower as CaixaBank--down 4.1%--dragged.

--The dollar edged lower as investors turn cautious ahead of the Federal Reserve's policy decision later. While the Fed is largely expected to leave rates steady, a rate rise cannot be ruled out. LSEG data show markets pricing a 71% chance of unchanged rates and a 29% chance of a 25 basis-point rate increase. The decision is due at 1800 GMT. The DXY dollar index falls 0.1% to 101.313

--U.S. Treasury yields edged higher. "Our base case remains that the Fed stays on hold in July and through the end of 2026," Principal Asset Management's Seema Shah said in a note. Recent inflation data and contained inflation expectations give policymakers scope to wait for greater clarity before acting, the chief global strategist said. The 10-year Treasury yield was up 0.6 basis points at 4.609%.

--Eurozone government bond yields rose in early trade. While the Fed is widely--although not unanimously--expected to stay on hold, the key question should be how markets will "fill the guidance gap" during the press conference, said Commerzbank's Erik Liem in a note. The 10-year Bund yield rose 1.6 basis points to 3.122%.

--Bitcoin rose 0.8% to $64,344.

--In early European trading, New York gold futures were up 0.2% to $4,045.80 a troy ounce. "Although gold has fallen by nearly 25% since the conflict began, the metal has remained supported around the $4,000/oz level by sustained dip-buying," said Soojin Kim, analyst at MUFG.

Write to Barcelona Editors at barcelonaeditors@dowjones.com

(END) Dow Jones Newswires

July 29, 2026 04:15 ET (08:15 GMT)