WASHINGTON: Wall Street followed global markets higher Wednesday and the price of US crude fell eased despite a new barrage of attacks by Iran on its Gulf neighbours.
Futures for the S and P 500 and the Dow Jones Industrial Average each rose 0.5 per cent ahead of the Federal Reserve's decision on interest rates later in the day. Nasdaq futures climbed 0.6 per cent.
US benchmark crude fell USD 1.24 to USD 94.53 per barrel. Brent crude, the international standard, rose 75 cents to USD 104.17 per barrel. That's down from more than USD 106 on Monday.
With higher oil prices feeding into other inflation, the Fed is widely expected to keep rates on hold Wednesday
The Fed will also release a set of quarterly projections, which could result in the central bank trimming its forecast of one rate cut this year, to zero. Though seemingly a minor adjustment, it would be a major course correction after 18 months of on-again, off-again rate cuts.
The Iran war has made it a particularly difficult time for policymakers to issue economic projections. Gas prices are soaring and will push up inflation for at least the next month or two. The average price for a gallon of gasoline spiked again overnight, reaching USD 3.84. A gallon of gas last month, before the US and Israel attacked Iran, was well under USD 3.
Many economists expect the Fed will forecast that inflation will remain as high as 3 per cent even by late 2026, well above its December projection of 2.6 per cent. An increase of that magnitude could be hard to square with more interest rate cuts.
Iran lashed out Wednesday with multiple attacks on its Gulf neighbours and Israel following the killing of one of its top leaders in an airstrike. Iran's missiles evaded air defences, killing two near Tel Aviv.
Global oil flows remain largely constrained, ING Bank analysts Warren Patterson and Ewa Manthey wrote in a research note on Wednesday, even as hopes were growing that Iran might be allowing more vessels through the Strait of Hormuz, a key waterway for global oil and gas transport.
Roughly a fifth of the world's crude oil passes through the strait, which has been largely closed as Iran blocks ships linked to the US, Israel and their allies.
In equities trading, Macy's jumped about 7 per cent after the department store reported stronger-than-expected profits in the crucial fourth-quarter as comparable sales rose again. The department store said an overhaul of its merchandise and improved customer service led to more spending by shoppers.
In Europe, Germany's DAX rose 0.9 per cent, the CAC 40 in Paris picked up 1.1 per cent and Britain's FTSE 100 edged 0.2 per cent higher.
During Asian trading, Tokyo's Nikkei 225 gained 2.9 per cent to 55,239.40 after the government reported exports were higher than expected in February.
In South Korea, the Kospi jumped 5 per cent to 5,925.03.
Lower oil prices are a boon for big oil importers like Japan and South Korea.
Hong Kong's Hang Seng reversed early losses, surging 0.6 per cent to 26,025.42, while the Shanghai Composite index also rebounded, gaining 0.3 per cent to 4,062.98.
Australia's S and P/ASX 200 climbed 0.3 per cent to 8,640.60.
Taiwan's Taiex added 1.5 per cent and India's Sensex advanced 1 per cent.