Asian stock markets tried to stabilise on Tuesday and oil prices came off highs after Israel and Iran said they would halt attacks on each other for now, while ever-hopeful investors bought the latest dip in semiconductor stocks.
Analysts cautioned the bounce was narrowly based with 60% of the S&P 500 finishing in the red overnight even as the overall index edged up. Share futures for Wall Street and Europe were also lower in early trading.
Higher bond yields continued to test stretched equity valuations, with shipping through the Strait of Hormuz still badly restricted.
"Inflation remains sticky enough that 46 of 68 global central banks are overshooting targets, which helps explain why bond markets are repricing for tighter policy, and why long-duration assets, private credit, and several EM currencies are struggling," analysts at BofA said in a note.
"Our Global Breadth Rule shows nearly half of equity markets already overbought, led by Korea, Taiwan and Finland."
South Korea's share market climbed 3.0%, having dived more than 8% on Monday after a run of spectacular gains left valuations stretched and retail investors with extended margin positions.
Japan's Nikkei inched up 0.3%, after losing 3.9% the previous session, while MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9%.
For Europe, EUROSTOXX 50 futures and DAX futures both fell 0.6%, while FTSE futures dipped 0.4%.
S&P 500 futures and Nasdaq futures were both down 0.3%. The next big test for tech will be results from Oracle on Wednesday.
Priced for rate hikes
Apple shares failed to get any initial boost from a long-delayed AI overhaul of Siri, unveiled at its annual Worldwide Developers Conference.
ChatGPT-maker OpenAI confidentially filed for a U.S. initial public offering on Monday, joining rival Anthropic in a trillion dollar rush for equity financing.
Bond markets continued to struggle as the strong May U.S. payrolls report pushed investors to price in more risk of rate hikes from the Federal Reserve. Data on U.S. consumer prices due Wednesday are expected to show surging energy costs kept pushing headline inflation higher in May.
Futures imply around a 60% chance of a Fed rate rise as soon as October, and a quarter-point move is almost fully priced for December.
Two-year Treasury yields stood at 4.158%, having hit their highest since early 2025 at 4.201% overnight.
Markets are also fully priced for a quarter-point hike to 2.25% from the European Central Bank when it meets on Thursday, and see the key rate at 2.5% or 2.75% by year-end.
The surprising strength of U.S. employment kept the dollar underpinned at 160.17 yen, just off an overnight top at 160.395. The next bull target is a 160.725 peak from April, though investors are wary a break could draw renewed intervention from Japanese authorities.
The euro was stuck at $1.1527, after hitting a nine-week low at $1.1500 overnight, while the pound edged off a three-week trough to $1.3334.
In commodity markets, Brent crude eased 0.2% to $94.08 a barrel, after pushing as high as $98.00 overnight, while U.S. crude dipped 0.3% to $91.06 a barrel.
Gold slipped 0.3% to $4,316 an ounce, having touched a two-month trough at $4,268.39 on Monday.
(Reporting by Wayne Cole; Editing by Kevin Buckland)
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