Markets React to Fed Policy Uncertainty and Easing Middle East Tensions

Hello, this is Justina Lee writing to you from Singapore. Welcome to another edition of CNBC's Daily Open.

Kevin Warsh chaired his first Fed meeting with a series of announcements that kept markets guessing about policy trajectory, while tensions in the Middle East continued to ease on Iran-U.S. deal to end the war.

With the deal stipulating restoration of energy shipments via the Strait of Hormuz, oil prices have dropped, but prospects of a toll system have muddied the long-term protocol over navigation via the critical waterway.

Warsh in his inaugural press conference as the chair of the Federal Reserve announced the establishment of five task forces, including for addressing the Fed's communications and its balance sheet.

He also revamped the Fed's policy statement, saying that "it's a bit shorter, a bit simpler, and it dispenses with some older language," while refraining from contributing to the "dot plot" that shows policymakers rate expectations.

U.S. stocks declined Wednesday, while Treasury yields climbed, amid uncertainty over the path of monetary policy as several Federal Reserve officials signaled a rate hike this year to curb inflation.

Moving from policy uncertainty to some clarity on geopolitical front, President Donald Trump reportedly said he had signed ​the memorandum ⁠of ​understanding ​with Iranian President Masoud Pezeshkian aimed at ending the ​war.

Trump, however, said he liked the idea of blaming Vice President JD Vance if a deal to end the war with Iran does not work out, raising concerns that the agreement might not lead to a lasting peace in the region.

While the world has been dealing with an energy supply shock due to the Iran war, the International Energy Agency on Wednesday said a resolution to the Middle East conflict could result in significantly higher supply volumes and spark a major oil overhang next year.

Over in the tech space, Anthropic CEO Dario Amodei and Google DeepMind CEO Demis Hassabis urged that a U.S.-led coalition should craft AI rules and standards. The closed-door meeting at the G7 summit was attended by tech and state leaders, including Trump.

SpaceX, meanwhile, remains in the spotlight after its record IPO last week. Its newly minted trillionaire CEO Elon Musk just added his longtime friend and ally, Roelof Botha to the rocket maker's board. Botha will serve as an independent director and a member of the company's audit committee, becoming the eighth board member at SpaceX.

—Justina Lee