Kamal Ghorui
US stock markets rebounded on Wednesday after two days of sharp volatility, supported by easing oil prices and encouraging economic data that improved investor confidence.The S&P 500 rose 0.8 per cent in midday trading and was on course to recover most of the losses recorded since the war with Iran began. The Dow Jones Industrial Average gained 301 points, or 0.6 per cent, while the Nasdaq Composite climbed 1.3 per cent, AP reported.The recovery followed a turbulent start to the day in global markets. South Korea’s Kospi index plunged 12.1 per cent earlier, marking the worst single-day fall in its history, as uncertainty over the conflict in the Middle East triggered intense volatility across financial markets.Oil prices moderated as trading shifted from Asia to Europe and the United States. Brent crude, the global benchmark, eased 0.6 per cent to $80.88 a barrel after briefly rising above $84. US benchmark crude also declined 0.6 per cent to $74.14 a barrel.Investor sentiment was also supported by fresh economic data pointing to resilience in the US economy.One report showed business activity in services sectors such as real estate and finance accelerated last month at the fastest pace since the summer of 2022. The report also indicated that prices charged by these businesses rose at a slower pace, at least before the escalation of the Iran conflict.Another report suggested US employers outside the government increased hiring last month, potentially signalling strength ahead of the official employment report due from the US government later this week.Despite the rebound, investors remain focused on how long the conflict with Iran could last and the impact of rising oil prices on inflation and corporate earnings.Historically, the US stock market has tended to recover relatively quickly from military conflicts in the Middle East, provided oil prices do not surge excessively. Some investors therefore see the current volatility as temporary.Not all market participants share that optimism.“I think the Iran situation is getting out of hand, and I think that US President Donald Trump miscalculated enormously,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very grim.”On Wall Street, crypto-linked stocks rallied as bitcoin rose back above $73,000. Coinbase Global surged 15.3 per cent, while Robinhood Markets advanced 7.8 per cent.Retail and travel stocks also gained on expectations that easing fuel costs and a stable economy could support consumer spending. Ross Stores rose 7.4 per cent after reporting better-than-expected profit and revenue and saying it is entering 2026 with “solid momentum.” Expedia Group added 3.6 per cent.Big technology companies were among the biggest contributors to the market’s gains. Nvidia advanced 1.5 per cent and Amazon climbed 3.1 per cent, with their large market capitalisation giving them significant influence on the S&P 500.In overseas markets, European indices recovered after sharp losses in Asia. France’s CAC 40 rose 0.8 per cent and Germany’s DAX jumped 1.7 per cent. Earlier in the day, Hong Kong’s Hang Seng had fallen 2 per cent and Japan’s Nikkei 225 declined 3.6 per cent.Bond markets were relatively stable after earlier volatility. The yield on the 10-year US Treasury note held steady at 4.06 per cent.The encouraging economic data offered some relief for the Federal Reserve, which is balancing efforts to keep inflation under control while supporting employment.However, the recent surge in oil prices complicates that task because higher energy costs can push inflation higher.The Fed had earlier indicated that it could resume interest rate cuts later this year to support economic growth. But rising oil prices and geopolitical tensions have led traders to push expectations for the next rate cut further into the summer.
