Stocks hold steady, oil prices show gains as market absorbs impact of Middle East tensions

Most stocks remained steady on Wednesday, while oil prices and some safe-haven assets saw gains, indicating that the market has largely absorbed the impact of rising tensions in the Middle East for now.

Europe's STOXX 600 index rose by 0.24%, and MSCI’s broad Asia-Pacific index climbed 1.23%, despite growing concerns over a potential wider conflict following Iran's ballistic missile strike on Israel.  

The U.S. dollar — largely viewed as a safe-haven asset, along with gold — also held near a three-week high against the euro.

Support from broader macroeconomic factors also boosted the dollar. Data indicating a strong U.S. job market suggested that the Federal Reserve might opt for a smaller interest rate cut in November, while declining inflation in the eurozone fueled expectations for European Central Bank (ECB) easing later this month. U.S. S&P 500 futures dipped 0.19%, following a 0.9% drop in the cash index overnight. Mainland Chinese markets were closed due to the Golden Week holiday.

Oil prices tick up as Iran claims missile attack on Israel over

Earlier on Wednesday, Iran announced its missile strikes on Israel had concluded unless further provoked, while Israel and the U.S. warned of potential retaliation.

Oil prices continued their upward momentum, with Brent crude rising 1.9% to $74.99 per barrel, building on Tuesday's 2.5% surge. U.S. WTI futures increased 2.2% to $71.40 per barrel after a 2.4% gain on Tuesday.

Gold price eases, dollar index holds steady, euro flat

In other markets, asset movements were cautious, as broader macroeconomic issues seemed to overshadow any immediate investor reactions to developments in the Middle East.  

Gold prices eased by 0.3% to $2,654.27 per ounce, after jumping more than 1% in the previous session, nearing last month’s record high of $2,685.42. U.S. Treasury yields on 10-year notes edged up about 4 basis points to 3.7467%.

The dollar index, which measures the strength of the U.S. currency against the euro and five other major peers, held steady at 101.25, after hitting 101.39 on Tuesday — its highest since mid-September. The euro remained flat at $1.1061 after a 0.6% decline the day before, when it dipped to its lowest point since Sept. 12.

Eurozone inflation holds below ECB’s 2% target, boosts expectations for mid-October rate cut

Data from the euro area showed inflation had fallen below the ECB’s 2% target, reinforcing expectations for a rate cut at the bank's upcoming meeting on October 17.  

Meanwhile, U.S. data revealed a solid economy, with job openings unexpectedly rising in August. Fed Chair Jerome Powell, however, pushed back against expectations of another “jumbo” 50-basis-point rate cut in November in a recent speech. Key private payrolls data is due later on Wednesday, ahead of the potentially crucial nonfarm payrolls report on Friday.

A major dock strike in the U.S., which could cost the country’s economy $5 billion a day, also continues to be a key concern for investors, with no significant progress in negotiations overnight.