European equity markets reacted favorably yesterday to the announcement of a preliminary peace agreement between the United States and Iran, with a formal signing scheduled for this Friday in Geneva.

Marking its third consecutive winning session, the CAC 40 gained approximately 0.4% to reach 8,384 points, while the Euro STOXX 50 climbed 0.8% to set new all-time highs.

The rebound was even more pronounced on Wall Street, where the S&P 500 rallied 1.7% last night, fueled by a rotation back into high-tech stocks, led by the AI sector.

Markets to Scrutinize the Warsh Method

All eyes now turn to Washington, where the Fed begins its two-day Federal Open Market Committee (FOMC) meeting today, the first held under the leadership of its new chair, Kevin Warsh.

While investors widely anticipate the U.S. central bank will maintain the status quo, they will closely examine new economic projections and the tone of the press conference held by Donald Trump's appointee for clues regarding the future interest rate trajectory.

Observers expect Kevin Warsh to remain comfortable with the wait-and-see approach favored by his predecessor, Jerome Powell, likely deferring any radical policy shifts to a more distant horizon.

"We believe Warsh will downplay the importance of forward guidance, favoring a patient approach to rates and inflation, thereby adopting a more dovish stance than the market anticipates," predicts Xiao Cui, senior economist at Pictet Wealth Management.

Tokyo Unfazed by BoJ's Historic Rate Hike

In Asia, the Tokyo Stock Exchange advanced 0.3% as traders showed little reaction to the Bank of Japan's decision to raise its key interest rate by 25 basis points to 1%, its highest level since 1995.

Moving away from its historically accommodative stance, the BoJ recently estimated its neutral rate to be around 1.50%, suggesting room for another rate hike during the second half of the year.

Futures currently indicate a flat to slightly lower opening for Wall Street.

Ahead of the Fed's announcements, the yield on the 10-year U.S. Treasury note is currently down 1.8 basis points at 4.4690%.

The dollar, which has performed well in recent weeks on expectations of higher U.S. rates, is losing some momentum ahead of the Fed's statement. The euro is currently trading at $1.1575 against the greenback.

Crude Oil at Three-Month Lows on Iran De-escalation

Meanwhile, oil prices continue to trend lower as the prospect of a diplomatic resolution in the Middle East overshadows supply concerns, particularly with the potential reopening of the Strait of Hormuz.

July contracts for West Texas Intermediate are trading around $80.4 per barrel (-0.4%), the lowest level since early March, while Brent crude for the same maturity fell 0.4% to $82.8, also hitting a three-month low.