Key insights
- US futures are stable ahead of Trump's China trip. Rising inflation due to the Iran war is a concern, pushing up market expectations for Fed rate hikes and Treasury yields, which could weigh on equities. Producer price data is due later today. Cisco's earnings will also be released.
Investing.com - Futures linked to the main U.S. indices are broadly stable, as President Donald Trump heads to China for a key summit. While Trump is projected to discuss several issues with Chinese leader Xi Jinping this week, the ongoing Iran war will likely be among the chief topics. Cisco Systems is due to fire the starting gun on earnings for periods ending in April, while the Senate is expected to confirm Kevin Warsh as the next Federal Reserve Chair.
- Futures steady
U.S. stock futures hovered around both sides of the flatline on Wednesday, ahead of Trump’s trip to China and a fresh batch of inflation data.
By 03:33 ET (07:33 GMT), the Dow futures contract had fallen by 26 points, or 0.1%, S&P 500 futures had risen by 12 points, or 0.2%, and Nasdaq 100 futures had gained 151 points, or 0.5%.
The main averages on Wall Street were mixed in the prior session, as an ongoing stalemate between Washington and Tehran mixed with a cooldown in chipmaking stocks after these names recently shot higher on renewed enthusiasm around artificial intelligence.
Clouding sentiment was data showing that U.S. consumer prices rose at another brisk pace in April following a steep gain in the prior month. The figures underlined what has become a recurring concern in markets: The Iran war, and its attendant closure of the Strait of Hormuz, is causing an energy shock that may drive up inflation and lead to central bank interest rate hikes around the world.
To that the end, the amount of Federal Reserve rate increases expected by the market by next April hit a new high of 20 basis points. The benchmark 10-year U.S. government bond yield, in turn, climbed to its highest point since June 2025, while the rate-sensitive 2-year note also advanced. An uptick in yields, which tend to move inversely to prices, can weigh on the appeal of equities.
More inflation lies ahead. Traders will have the chance to pour through a tracker of producer prices later today.
- Trump heads to China
Attention is now turning to China, where President Trump is set to meet with Chinese counterpart Xi Jinping this week.
The two leaders are anticipated to discuss a range of topics, including trade and Taiwan.
But it may be the ongoing fight between the U.S. and Iran that will likely receive much of the focus. Analysts have suggested that China, as a major importer of Iranian crude, could be persuaded to act as a guarantor of a lasting peace deal, although some observers have ramped down expectations that such a breakthrough could come from the gathering.
Diplomatic efforts to forge an agreement between Washington and Tehran appear to have stalled. Earlier this week, Trump dismissed an Iranian response to an American peace proposal, describing it as “unacceptable” and a “piece of garbage.” Reports have also swirled around whether the White House will resume strikes against Iran.
Tehran, for its part, has not indicated that it has further plans to attempt to appease Trump.
- Oil eases, but remains elevated
Crucially, the stalemate means the Strait of Hormuz, a vital waterway off of Iran’s southern coast through which roughly a fifth of the world’s oil transits, is effectively shuttered, as it has been for weeks.
In a note, analysts at Deutsche Bank said there is "increased nervousness [among investors] that a U.S.-Iran deal looks further away than most would have hoped when the more positive news flow came through a week ago," when media reports seemed to indicate that an accord was imminent.
As a result, oil prices are floating well above roughly $70 a barrel, the level they were at before the U.S. and Israel launched a joint assault on Iran in late February. Brent crude futures, the global oil benchmark, were last lower by 0.9% at $106.82 a barrel.
- Cisco to report
On the earnings calendar, results from Cisco Systems will be put under the microscope after the close of U.S. markets.
Notably, the returns from the networking gear firm will kick off a slew of reports for fiscal quarters ending in April. An earlier set of numbers for the period finishing in March were strong, helping support broader stock markets against headwinds from geopolitical tensions and looming inflation.
In February, Cisco logged adjusted gross margin which was below expectations, due in part to a sharp jump in the price of memory chips. A shortage of the supply of these processors, fueled by the rapid build-out of AI infrastructure, has driven an uptick in cost.
CEO Chuck Robbins noted at the time that, against this backdrop, Cisco is raising its own prices and updating contractual terms with its customers.
- Senate confirms Warsh to Fed board; Chair vote ahead
The U.S. Senate is expected to hold a vote confirming Kevin Warsh as the next Fed Chair on Wednesday, replacing current leader Jerome Powell, whose term later this week.
On Tuesday, the Senate signed off on Warsh’s nomination to the central bank’s Board of Governors in a 51-45 vote, granting him a 14-year term on the central bank’s board.
Senators were largely split along party lines during Tuesday’s vote. Democrat John Fetterman of Pennsylvania joined Republicans in support of Warsh’s confirmation to the board.
Warsh was picked to helm the Fed by Trump, who has continued to badger policymakers to slash interest rates to help lift economic activity.