Crude prices have fallen on news that Iranian fuel might soon hit the world's markets, bringing inflation relief and pushing bond yields lower, while stocks and currencies were quiet before Kevin Warsh's debut as Federal Reserve chair.
Brent crude futures dove below $US80 and are down more than a third from recent peaks following reports that the US will waive sanctions on Iranian oil under a deal to end the war.
The prospect of extra supply added to optimism about the resumption of Middle East exports and helped push yields on US Treasuries lower along with a rally in global bonds, even as the conflict has drained strategic oil reserves.
"Iran's total exports could approach around the equivalent of two per cent of global demand," said Luka Belobrajdic, an economist at Westpac, though he cautioned any sanctions relief is unlikely to be immediate and would depend on the durability of peace.
German 10-year government bond yields, the euro zone benchmark, fell for a fifth day, hitting their lowest point since early April; they were last down 1.6 basis points at 2.91 per cent.
British yields fell sharply after May inflation unexpectedly held at a 13-month low of 2.8 per cent, a day before the Bank of England is slated to unveil its next rate decision.
US Treasury yields steadied at 4.43 per cent, down around 23 basis points from a May peak.
Few details of the US-Iran agreement, due to be signed on Friday, have been publicly confirmed, and a three-month stranglehold on the Strait of Hormuz has US oil reserves at their lowest point since 1983.
Falling oil prices could ease concerns about an economic slowdown in energy-importing Europe, whose stock markets have lagged tech-heavy Wall Street indices in 2026.
"Lower prices could lead to a recovery in manufacturing and consumer sentiment," wrote Deutsche Bank strategist Maximilian Uleer, dropping his preference for US stocks over Europe.
The pan-European STOXX 600 rose 0.1 per cent on Wednesday, staying close to Monday's record.
Shares in BMW fell eight per cent after the German automaker slashed its 2026 outlook, citing a downturn in China and the impact of the US-Israeli war on Iran.
The FTSE 100 was 0.1 per cent lower.
Wall Street futures pointed to a bounce in tech after heavy losses among US chipmakers, as volatility resurfaced in the sector after a record-breaking run.
Chipmaker-heavy markets in Tokyo and South Korea shrugged off a negative lead from US selling in semiconductor shares, though a fall for Taiwan's TSMC capped gains in Taiwan's benchmark.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 per cent and in China, AI gains offset sagging consumer stocks in the wake of weak retail sales data.
Traders are waiting to see how Warsh walks the line between his dovish president and the markets, which expect a hike in 2026.
The anticipation has broadly held the dollar in stasis.
The euro has firmed only a little this week to hover about $US1.16.
Tuesday's rate hike in Japan failed to lift the yen, though the downside was protected by the risk of official intervention, holding it at 160.2 to the dollar.
Gold , down more than 20 per cent from January peaks, has bounced strongly from support at around $US4,000 an ounce and was last at $US4,325 an ounce on Wednesday.
