Global shares steady as IEA plans record oil release

Global equity markets found a footing on Wednesday in Singapore and across Asia, even as volatility in the energy sector persisted due to the ongoing conflict involving the United States, Israel, and Iran. While oil prices saw a brief retreat following reports of a potential massive release of strategic reserves, investors remain cautious about the long-term impact on global growth and inflation. Brent crude futures fluctuated near $87.89 per barrel, while U.S. crude held around $83.47. The market reacted to reports that the International Energy Agency has proposed a record release of oil reserves to mitigate price spikes. However, intense airstrikes in the Middle East have dampened hopes for a quick resolution to the hostilities. Frank Benzimra, head of Asia equity strategy at Societe Generale, noted that the reserve release provides a temporary buffer. > This news on the strategic reserves being released is welcomed by the market, because then, in the case of a short conflict, there is enough oil to avoid any rationing or economic impact. Despite the geopolitical tension, major indices showed resilience. The broadest index of Asia-Pacific shares from MSCI Inc. rose 1.6%. In Japan, the Nikkei advanced 2.1%, while markets in South Korea saw the Kospi climb 3.2%. U.S. stock futures for the Nasdaq and S&P 500 also edged higher, signaling a potential recovery after a mixed session. Energy analysts are closely monitoring the Strait of Hormuz, a vital chokepoint for global oil supplies. There are growing fears that infrastructure damage or prolonged drone attacks could destabilize the market well into next year. Kerstin Hottner, head of commodities at Vontobel, highlighted the logistical risks facing the sector. > Chief among them is the timing of safe passage for vessels through the Strait of Hormuz, a critical chokepoint for global oil supply. The U.S. dollar maintained its status as the preferred safe-haven asset, gaining against the yen and holding steady against the euro and sterling. Meanwhile, bond markets remain under pressure as investors weigh the risk of central banks maintaining hawkish stances to combat energy-driven inflation. The 10-year Treasury yield stood at 4.1460% ahead of the upcoming U.S. inflation data release. Thierry Wizman, global FX and rates strategist at Macquarie Group, suggested that central bank policy will likely remain restrictive. > The general tone of central banks will remain hawkish so long as the threat of the wars inflationary implications persist.