US equity futures climbed sharply on Wednesday, extending this week’s rebound amid signs that US officials are seeking to de-escalate tensions with Iran. Futures on all three major indices were up more than 1%.
Energy commodities pared part of their strong gains from earlier in the month, while US Treasuries rallied following reports that Washington has drafted a proposal to halt fighting in the Middle East. The prospect of a cease-fire bolstered expectations for a softer inflation outlook, even as Iran maintained a hawkish stance.
The retreat in benchmark bond yields underpinned risk appetite on Wall Street, with pre-market advances seen across all sectors except energy producers. Asset managers outperformed as investors reassessed the risks stemming from a recent wave of redemption requests in flagship private equity funds; shares of Apollo, Ares, and KKR each gained about 1.5% in early trading.
Separately, Merck traded modestly higher after announcing an agreement to acquire Terns Pharmaceuticals in a deal valued at $6.7 billion.