U.S. equity futures were little changed on Wednesday, suggesting a muted start for Wall Street following several sessions of declines as investors monitored developments in the Middle East and upcoming economic data.

Oil prices and U.S. Treasury yields moved lower after their recent increases, while geopolitical uncertainty remained in focus following another exchange of attacks involving the U.S. and Iran.

Iran launched missiles and drones toward U.S.-linked sites in Bahrain, Jordan and Kuwait on Wednesday. The action followed U.S. strikes against Iranian military targets on Tuesday.

The Iranian response came after U.S. President Donald Trump warned that retaliation would result in Iran being “hit much harder” and said the U.S. was still holding back “the biggest attack of them all.”

U.S. Crude Falls After Two-Session Rally

U.S. crude oil futures declined 0.8% on Wednesday after gaining more than 8% over the previous two sessions.

Treasury yields also moved lower, with the benchmark 10-year yield retreating after reaching its highest closing level in almost three years.

Recent increases in oil prices and bond yields have drawn investor attention because of their potential implications for inflation and monetary policy. The eventual effects will depend on how energy prices and financial conditions develop.

Markets are also awaiting Friday’s Labor Department employment report for further evidence about the condition of the U.S. labour market.

ADP Reports 38,000 Private-Sector Jobs Added in August

ADP reported that U.S. private employers added 38,000 jobs in August, below the 48,000 increase expected by economists.

July’s increase was revised to 46,000 jobs from the previously reported 44,000.

The ADP report provides an indication of private-sector employment conditions but does not necessarily correspond with the figures that will be reported in Friday’s government employment data.

The upcoming Labor Department report will provide additional information for investors assessing the economic and monetary policy outlook.

U.S. Indices Extend Declines on Tuesday

Wall Street recorded another negative session on Tuesday, with all three major indices closing lower.

The Nasdaq Composite declined 271.11 points, or 1%, to 26,099.77. The Dow Jones Industrial Average lost 419.02 points, or 0.8%, to finish at 52,766.88, while the S&P 500 dropped 54.67 points, or 0.7%, to 7,631.47.

The indices recovered from their intraday lows but still finished with notable losses.

The session coincided with an announcement from U.S. Central Command that American forces had conducted another series of strikes against Islamic Revolutionary Guard Corps targets in Iran.

Centcom said the action followed attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and U.S. military personnel stationed in the region.

Trump Issues Warning Following U.S. Strikes

President Donald Trump responded to the latest developments with a warning to Iran on Truth Social.

Trump said Iran would be “hit again at a much harder and higher level” if it retaliated.

“But it will not be the biggest attack of them all, that is waiting in the wings and, when it is over, there will be very little left of the Islamic Republic of Iran!” Trump said.

U.S. crude futures rose by more than 5% during Tuesday’s trading following the latest military developments.

The increase brought renewed attention to the potential inflationary effects of higher energy prices. However, the implications for inflation and interest rates will depend on whether the increase in oil prices is sustained.

ISM Manufacturing PMI Falls to 54.6

Investors also assessed economic data showing that U.S. manufacturing activity continued to expand in August, although at a slower pace.

The Institute for Supply Management’s manufacturing PMI declined to 54.6 from 55.6 in July, below economists’ forecast of 55.2.

Readings above 50 indicate expansion.

The manufacturing data, together with the latest private-sector employment figures, provide additional information ahead of Friday’s government jobs report.

While economic data may influence expectations for the Federal Reserve’s meeting later this month, the outcome of the central bank’s next interest-rate decision remains dependent on policymakers’ assessment of employment, inflation and other economic conditions.

Gold and Technology-Related Sectors Record Losses

Several areas of the U.S. equity market recorded larger declines during Tuesday’s trading.

The NYSE Arca Gold Bugs Index dropped 4.2% as gold-related stocks moved lower alongside the precious metal.

Networking shares also declined, with the NYSE Arca Networking Index falling 2.6%, while the Dow Jones Transportation Average lost 2.5%.

Software, housing and semiconductor stocks were also lower. Oil producers and pharmaceutical companies, meanwhile, moved higher against the broader market trend.

Wednesday’s relatively flat futures indicated a more limited move ahead of the open as investors continued to assess geopolitical developments, oil prices, Treasury yields and forthcoming U.S. employment data.

European equities traded lower on Wednesday, with major indices approaching one-month lows as investors assessed higher oil prices, rising government bond yields and the outlook for monetary policy.

Brent crude moved toward $95 a barrel following U.S. military strikes on targets in Iran and subsequent Iranian missile and drone attacks on sites across the region.

The developments increased concerns about potential energy supply disruptions and commercial shipping through the Strait of Hormuz.

Eurozone Bond Yields Extend Gains

Eurozone government bond yields moved higher, following similar increases in U.S. and Asian bond markets overnight.

The moves came as investors assessed the outlook for European Central Bank monetary policy following the latest Eurozone inflation data.

The supplied information indicates that Eurozone inflation reached a nearly three-year high in August. Market expectations cited in the source point to a 25-basis-point ECB rate increase at its September 10 meeting.

While markets may assign a high probability to a rate increase, the ECB’s decision has not yet been made and will depend on its assessment of inflation, economic conditions and other available data.

DAX, FTSE 100 and CAC 40 Trade Lower

Germany’s DAX was down 0.4%, while the UK’s FTSE 100 declined 0.3%.

France’s CAC 40 fell 0.1%.

The declines came as investors monitored developments in energy markets and sovereign bond yields alongside the monetary policy outlook.

Prudential and BP Shares Move Lower

British insurer Prudential (LSE:PRU) traded slightly lower despite announcing plans to repurchase up to $1.472 billion of shares by December 18, 2026, under its existing share buyback programme.

The share-price movement and buyback announcement occurred during the same session, but the supplied information does not establish the factors responsible for the stock’s decline.

BP Plc (LSE:BP.) also moved lower after appointing Ian Tyler as its new chair.

The supplied information similarly does not establish that the management appointment caused BP’s share-price movement.

Halma and Wizz Air Trade Higher

Halma (LSE:HLMA) moved higher after agreeing to acquire U.S.-based water quality monitoring specialist Pyxis.

The transaction has an initial value of $170 million, according to the supplied information.

Wizz Air Holdings (LSE:WIZZ) also traded higher after reporting its August operating performance.

European markets remained focused on the combination of higher energy prices, rising bond yields and expectations surrounding the ECB’s September policy meeting.

U.S. stock futures traded close to unchanged on Wednesday as markets awaited economic data and the Federal Reserve’s Beige Book while assessing higher government bond yields, oil prices and developments involving the United States and Iran.

S&P 500 Futures were flat at 7,637.5 points at 03:20 ET, with Nasdaq 100 Futures unchanged at 29,112 points. Dow Jones Futures were up 0.17% at 52,914 points.

The relatively limited moves followed declines on Wall Street, where the major indexes fell by as much as 1% during the previous session.

Middle East Developments Remain a Factor for Oil Markets

Markets continued to assess developments in the Middle East after the United States conducted another series of strikes against Iran’s Islamic Revolutionary Guard Corps. It was the second U.S. attack on Iran reported during the week.

The United States and Iran have provided different accounts of the status of the Strait of Hormuz. Washington says the waterway remains available to commercial shipping, while Tehran says it is closed.

Developments surrounding the region have coincided with higher oil prices, keeping the potential impact of energy costs on inflation among the factors being considered by investors.

Investors Await Fed Beige Book

Attention is also turning to U.S. economic releases and the Federal Reserve’s Beige Book, which could provide further information about economic conditions, employment and price pressures.

Investors are assessing the balance between persistent inflation and indications of slower economic or labour-market activity when considering the potential direction of interest rates.

Markets are also monitoring the Bank of Canada’s policy communication for information about how another major central bank is responding to inflation and borrowing costs.

Future policy decisions by the Federal Reserve and other central banks will remain dependent on economic data and policymakers’ assessments.

Global Government Bond Yields Continue to Rise

The U.S. 10-year Treasury yield was approaching 5%, putting it near its highest level in three years.

Elsewhere, Australia’s 10-year government bond yield reached its highest level in more than 15 years, while Japan’s equivalent yield was around levels not recorded for approximately 30 years.

Higher bond yields increase the returns available on government debt relative to equities. They can also raise borrowing and refinancing costs for companies and consumers.

In equity valuation models, higher interest rates can increase the discount rate applied to projected corporate cash flows, reducing their calculated present value. This can have a greater effect on some growth and technology companies where a larger proportion of expected earnings is forecast further into the future.

Oil, Interest Rates and Economic Data Remain in Focus

Markets are consequently assessing the interaction between higher oil prices, elevated government bond yields, geopolitical developments and expectations for U.S. monetary policy.

Incoming inflation, employment and broader economic data will provide additional information for investors assessing whether interest rates are likely to remain elevated or whether economic conditions could eventually allow policymakers to adjust their stance.

European equities were broadly flat on Wednesday after several major indexes closed at their lowest levels in more than a month in the previous session, as investors continued to assess elevated government bond yields and their implications for equity valuations and corporate financing costs.

Germany’s DAX and France’s CAC 40 both closed on Tuesday at their lowest levels in more than a month. London’s FTSE 100 also moved towards a one-month low as markets responded to volatility in global government bond yields.

German 10-year Bund yields were trading around 3.35%, near levels last seen in 2011, while U.S. 10-year Treasury yields moved above 4.78%.

Higher Bond Yields Affect Equity Valuations

Higher sovereign bond yields can affect equities through several channels. As returns available from government debt increase, the relative return investors receive for taking additional equity-market risk can decline.

Bond yields are also commonly incorporated into the discount rates used to calculate the present value of projected corporate cash flows. Higher discount rates reduce the present value assigned to future earnings, with the effect generally more significant for companies whose valuations depend heavily on earnings expected further into the future.

Rate-sensitive sectors can therefore face greater valuation pressure when long-term yields increase.

Higher borrowing costs can also increase financing and refinancing expenses for companies, potentially affecting profit margins and analysts’ earnings estimates.

Oil Prices Add to Inflation and Interest-Rate Focus

Crude oil prices moved above $90 a barrel following direct U.S.-Iranian strikes in the Persian Gulf, adding to market attention around the outlook for energy-driven inflation.

Traders were pricing an approximately 60% to 65% probability of a 25-basis-point interest-rate increase at the Federal Reserve’s 16 September meeting following comments from Chair Kevin Warsh at Jackson Hole.

In the eurozone, preliminary August data showed core inflation easing to 2.4%, while headline inflation increased to 3.3%, with energy costs contributing to the rise. Investors are assessing what the figures could mean for the European Central Bank’s 10 September policy meeting.

These market-implied probabilities and expectations remain subject to changes in economic data and central-bank policy signals.

DAX Declines While CAC 40 Trades Flat

Germany’s DAX fell 0.2% on Wednesday, while France’s CAC 40 was broadly unchanged.

Cyclical stocks, automakers and technology companies were among the areas facing pressure, alongside capital goods and consumer discretionary shares.

London’s FTSE 100 was broadly flat. Its weighting towards integrated energy companies provided some support as crude oil prices remained elevated.

Shell (LSE:SHEL) and BP (LSE:BP.) are among the major oil companies represented in the index.

BP shares rose 1.3% after the company appointed Ian Tyler as chairman.

FTSE 100 opens flat as TT Electronics raises its outlook and Wizz Air reports passenger growth, while Brent crude moves higher.

Market Overview

The FTSE 100 opened broadly unchanged, up 0.01 per cent at 10,789.94, as renewed US-Iran strikes and higher oil prices weighed on risk appetite. The Euronext 100 was unchanged at 1,905.94, while Germany’s DAX fell 0.20 per cent to 25,918.40 as rising global bond yields pressured European equities. In the US, the Nasdaq closed lower at 26,099.77 and the S&P 500 declined to 7,631.47.

Commodity markets were mixed, with copper and gold lower while Brent crude and natural gas moved higher. Oil remained supported by renewed concern over supply disruption as the US and Iran exchanged fresh strikes and tensions around the Strait of Hormuz intensified. Bitcoin was up against sterling. The US dollar and Japanese yen strengthened marginally versus the pound, while the euro and Australian dollar weakened slightly and the Swiss franc was broadly unchanged.

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Market Numbers

FTSE 100: Up (+0.01%), 10,789.94
Euronext 100: Unchanged (0.00%), 1,905.94
DAX: Down (-0.20%), 25,918.40
NASDAQ: Down, 26,099.77
S&P 500: Down, 7,631.47

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In the Headlines

Profit outlook raised – TT Electronics (LSE:TTG)
TT Electronics raised its full-year adjusted operating profit outlook above current market expectations after first-half adjusted operating profit increased and margins improved. The engineered electronics group also expects organic revenue growth to return during the second half, supported by its order book.

Passenger growth – Wizz Air (LSE:WIZZ)
Wizz Air carried 8.70 million passengers in August, up 25.9 per cent year on year, as the low-cost airline expanded capacity. The company is also extending its Spanish network with plans for a third base in the country at Santiago de Compostela.

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Currencies (vs GBP)

USD: Up (+0.02%), $1.3513
CHF: Unchanged (0.00%), Fr.1.0972
EUR: Down (-0.01%), €1.1658
JPY: Up (+0.02%), ¥216.485
AUD: Down (-0.01%), $1.8912
Bitcoin (BTC/GBP): Unchanged (0.00%), £57,393.09

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Commodities

Copper: Down
Gold: Down
Brent Crude: Up
Natural Gas: Up

The FTSE 100 traded lower on Wednesday as investors monitored further military exchanges involving Iran and the United States and developments affecting shipping in the Strait of Hormuz.

The UK benchmark was down 0.30% as of 03:18 ET (07:18 GMT), while Germany’s DAX declined 0.22% and France’s CAC 40 fell 0.16%. Sterling was 0.12% lower against the U.S. dollar at $1.3501.

Jefferies noted that risk assets had already weakened on Tuesday, when the S&P 500 declined 0.7% and the Eurostoxx fell 0.8%. The 10-year U.S. Treasury yield increased five basis points to above 4.80%.

Iran Reports Strikes on U.S. Bases

Iran’s Islamic Revolutionary Guard Corps said it had targeted the al-Dhafra and al-Minhad U.S. bases in the United Arab Emirates with drones. The claim had not been confirmed by UAE authorities.

Kuwait’s KUNA news agency reported that a drone strike caused a residential fire in Kuwait City. The fire was extinguished and no casualties were reported.

Iran also said it had targeted U.S. bases in Erbil, Iraq, while Bahrain issued a public alert.

Two tankers, the Sidr and Senegal Prosperity, were reportedly struck by projectiles in the Strait of Hormuz. ING analysts Warren Patterson and Ewa Manthey noted that the incidents followed strikes over the weekend and additional U.S. attacks on Iranian targets overnight.

CENTCOM said a series of U.S. strikes on Tuesday targeted IRGC “air defense sites, radar systems… and communications sites.”

Iran said five people were killed and around 50 injured in strikes at a wedding near Sirik. Iranian foreign ministry spokesman Esmaeil Baqaei described the incident as part of a “chain of atrocities.”

Iran separately said 11 people were killed in strikes in Khuzestan on Wednesday.

Jordan Disputes Iranian Claim of Direct Hit

Iran said it had fired missiles at a U.S. base in Jordan and claimed a direct hit.

Jordan’s military provided a different account, saying 13 missiles were launched and 10 were intercepted, with no casualties reported.

U.S. President Donald Trump also issued a warning to Iran on Truth Social, saying the country faced a response after which “there will be very little left of the Islamic Republic,” while adding that the United States has “almost total control” of Hormuz and that Tehran’s economy is “totally collapsing.”

The comments were contained in a single Truth Social post subsequently reported by ANI and CNN.

Jefferies Continues to See September Fed Hike as Unlikely

Jefferies analyst Mohit Kumar said the bank continues to expect no Federal Reserve interest-rate increase in September, citing its expectation for benign inflation data.

However, Jefferies said the threshold for a rate increase had declined following recent comments from Federal Reserve Governor Kevin Warsh concerning credibility.

The bank sees December as the earliest potential timing for an increase, depending on developments in the conflict and oil prices.

Brent Crude Trades at $95 a Barrel

Brent crude increased 0.37% to $95 a barrel, while U.S. crude rose 0.06% to $90.27.

Spot gold was down 0.02% at $4,327.33 an ounce, while gold futures declined 0.52% to $4,374.09.

UK Corporate Updates

BP (LSE:BP.) appointed Ian Tyler as chairman of the board. Amanda Blanc will step down as an independent director once a successor has been appointed.

Ryanair (NASDAQ:RYAAY) lowered its fiscal 2027 passenger target to 214 million from 216 million, citing elevated unhedged oil prices. The airline also warned of higher short-haul fares.