The biggest event on investors’ radar is the Federal Reserve’s policy announcement due later on Wednesday, followed by Chair Kevin Warsh’s post-policy press conference.
Markets remain divided over the outcome. According to CME FedWatch data, traders are assigning roughly a 64% probability that the Fed will leave interest rates unchanged at 3.5%-3.75%, while a sizeable minority expects a 25-basis-point increase. The split marks one of the most uncertain policy meetings in recent months.The policy decision comes against a backdrop of shifting inflation risks. Expectations of a status quo had strengthened only a few weeks ago as easing energy prices and improving geopolitical conditions suggested inflation pressures were moderating.
That narrative changed after fresh hostilities between the US and Iran resurfaced in July, briefly pushing oil prices back above the $100-a-barrel mark and reviving concerns that higher energy costs could complicate the inflation outlook.
Oil prices jumped again on Wednesday after Iran launched fresh attacks on US forces in the Middle East, ending a brief period of relative calm. Brent crude climbed nearly 4% to around $87 a barrel, while US benchmark West Texas Intermediate rose about 3% to trade near $82 a barrel.Corporate earnings are also expected to shape market sentiment. Earlier in the day, South Korean memory chip maker SK Hynix reported a 557% year-on-year jump in second-quarter operating profit, reflecting continued strength in demand for high-bandwidth memory chips used in advanced computing systems.
