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- Global shares traded near record highs ahead of the Fed's upcoming interest rate decision.
- Inflation concerns cooled as commodities interrupted their rally and dipped on Tuesday morning.
- Oil rose to two-year highs as economies continue to reopen, driving up energy stocks in Europe.
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Global shares and futures traded near record highs on Tuesday ahead of the outcome of the Federal Reserve's upcoming policy meeting the next day.
S&P 500 futures were last up 0.12% at 4:30 AM E.T., while Nasdaq futures were up 0.14% and Dow Jones futures rose by 0.05%, suggesting a modestly higher start to trading later on. The S&P and Nasdaq both closed at all-time highs on Monday.
The Fed's statement after its meeting will provide an indication of the central bank's thinking on the outlook for inflation and a possible shift in its asset purchase plan.
"Their core message that inflation is close to peaking and will soon start dropping back as reopening "frictions" ease is likely to be repeated – we still have doubts on this. We are likely to see a modest upward revision to their inflation forecasts to reflect the recent run of upside surprises," ING economists said.
Inflation concerns eased as commodity futures, which have been at the heart of the rise in prices in the last 12 months, continued to ease on Tuesday in Europe. Lumber fell below $1,000 for the first time since March on Monday and was down almost 6% on Tuesday at $996.20 per thousand board feet. US copper futures were last down 3.85% to $4.35 a pound on Tuesday, while nickel – a key ingredient in the production of steel – fell by 3.19% to $17,877.50 a ton.
The easing inflation pressures were also reflected in 10-year US Treasury yields, which were last at 1.484% on Tuesday, down 1.4 basis points.
Oil however continued its rally and was set for a fourth daily rise, after closing at a two-year high on Monday, which boosted European energy stocks. Brent crude futures were last at $73.05 per barrel, up 0.26% while WTI futures rose by 0.25% to $71.06 a barrel.
European equities extended gains on Tuesday after the German DAX and the Euro Stoxx 50 closed at record highs on Monday. The DAX was last up 0.66%, while the Euro Stoxx 50 was up 0.51%. London's FTSE 100 rose by 0.33% after data showed UK unemployment rate fell to an eight-month low in April. An extension of the UK's COVID-19 restrictions however likely dampened some of the upward momentum.
"While the outlook for unemployment appears more positive as we head into the summer months, that doesn't mean it can't go higher. A lot of jobs that were around over a year ago, may still not come back, and now that next week's June reopening date has slipped, we could see more businesses could fall by the wayside." Michael Hewson, chief market analyst at CMC Markets, said.
The pound initially rose after the data against both the dollar, but was last down 0.21% at $1.4084.
Asian markets were mixed on Tuesday, as the Japanese Nikkei 225 closed 0.96% higher but Hong Kong's Hang Seng index fell by 0.71% and China's Shanghai Composite lost 0.92%.