BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks may open a tad higher on Wednesday as the Iran-Israel ceasefire, announced by U.S. President Donald Trump appears to hold in the Middle East, and Federal Reserve Chair Jerome Powell said 'many paths are possible' for monetary policy, opening the door to an earlier rate cut.
The truce between Israel and Iran continues to hold, with Trump's envoy, Steve Witkoff, telling Fox News that the U.S. was hopeful about a long-term peace deal with Iran.
EU High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission, Kaja Kallas, described the ceasefire announcement as 'good news', noting that this was the moment that all parties related to the matter 'return to the negotiating table'.
Focus now shifts to Gaza where ongoing violence continues with staggering casualties.
On the economic front, U.S. new homes sales data for May, any developments around U.S.-EU trade talks and Fed Chair Powell's second day of testimony on Capitol Hill may garner attention later in the day as the July 9 end to the 90-day tariff pause looms.
Asian markets were mixed after rising sharply in the previous session. Treasury yields and the dollar index slipped, helping bullion recover some ground.
Spot gold was up 0.2 percent at $3,329 per ounce, after having hit a more than two-week low on Tuesday.
Oil prices rose over 1 percent after industry data revealed a significant drawdown in oil inventories.
'China can now continue to purchase oil from Iran,' Trump said on Truth Social and once again changed his stance on regime change in Iran, hours after declaring the Middle East rivals had agreed to a ceasefire.
The announcement surprised both oil traders and officials in his own government and it is likely that the outreach to both Iran and China will have implications for U.S. alliances and global diplomacy.
U.S. stocks rallied overnight as a fragile truce between Israel and Iran helped offset weak consumer confidence data and comments from Fed Chair Jerome Powell that rate cuts can wait until the economic effects of tariff increases are better known.
At the same time, Powell hinted that lower inflation and weaker labor hiring could lead to an earlier rate cut, prompting traders to price in two Fed cuts by the end of 2025, with a first move in September far more likely than next month.
The tech-heavy Nasdaq Composite surged 1.4 percent, the Dow gained 1.2 percent and the S&P 500 rose 1.1 percent to reach their best closing levels in four months.
European stocks advanced on Tuesday after the office of Israeli Prime Minister Benjamin Netanyahu and Iranian state media outlet Press TV confirmed a ceasefire had begun.
The pen-European STOXX 600 jumped 1.1 percent to hit a one-week high and notch its biggest single-day jump in over a month.
The German DAX climbed 1.6 percent, France's CAC 40 added 1 percent and the U.K.'s FTSE 100 finished marginally higher.
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