World markets drift, oil prices jump over 3 pc after UAE says it will exit OPEC

Global equities delivered a patchy performance on Wednesday, taking cues from a subdued session on Wall Street, while oil prices surged more than 3 per cent amid lingering uncertainty over how — and when — the Iran conflict will end.

US futures hinted at a tentative stabilisation, with contracts for the S&P 500 and the Dow Jones Industrial Average inching up by less than 0.1 per cent.

Attention remained fixed on the Federal Reserve, which was widely expected to leave its benchmark interest rate unchanged at 3.6 per cent as it concludes its policy meeting later in the day. Policymakers largely view this level as a balancing act — restrictive enough to curb inflation by dampening borrowing and spending, but not so tight that it risks derailing hiring or pushing up unemployment.

Across Europe, markets leaned negative in early trade. Britain’s FTSE 100 fell 0.6 per cent to 10,269.06, Germany’s DAX slipped 0.3 per cent to 23,958.39, and France’s CAC 40 dropped 0.6 per cent to 8,054.38.

Asian markets offered a more upbeat counterpoint — though not without caveats. Japan remained shut for a public holiday, but elsewhere gains were more visible. South Korea’s Kospi climbed 0.8 per cent to 6,690.90, Hong Kong’s Hang Seng jumped 1.7 per cent to 26,111.84, and China’s Shanghai Composite rose 0.7 per cent to 4,107.51.

Australia’s S&P/ASX 200 edged 0.3 per cent lower to 8,687.00, Taiwan’s Taiex slipped 0.6 per cent, while India’s Sensex advanced 0.9 per cent — a reminder that risk appetite hasn’t entirely vanished, just become selective.

Oil, meanwhile, stole the spotlight — and not in a reassuring way. Brent crude for June delivery climbed 3.1 per cent to USD 114.70 a barrel, while July contracts rose 3 per cent to USD 107.61. For context, Brent had been hovering near USD 70 before hostilities escalated in late February.

Benchmark US crude followed suit, gaining 3.4 per cent to USD 103.32 a barrel.

Markets are also closely watching the OPEC after the United Arab Emirates announced it would exit the cartel from Friday. With OPEC accounting for roughly 40 per cent of global oil supply, the move has injected fresh uncertainty into an already tense energy landscape. The UAE, one of the group’s biggest producers, has long chafed under output limits, signalling a desire to pump more.

Initially, the news nudged prices lower on expectations of increased supply.

“The UAE's exit will increase (oil) output,” ING Bank strategists Warren Patterson and Ewa Manthey wrote in a research note. “The UAE has been increasingly frustrated over recent years by its output being constrained by OPEC production quotas, which have kept it well below its potential.”

“However, before this can be tapped, there must be a resolution in the Persian Gulf that allows for uninhibited energy flows through the Strait of Hormuz once again," they added.

That caveat is doing a lot of heavy lifting. With US-Iran negotiations stuck and the Strait of Hormuz — through which roughly a fifth of global oil once flowed — still largely shut, near-term price movements hinge heavily on whether the vital corridor reopens.

Tehran has floated reopening the strait if Washington lifts its naval blockade, but the US appears unwilling to entertain any agreement that sidesteps Iran’s nuclear programme — leaving both sides entrenched.

Back on Wall Street, Tuesday’s session saw a pullback from recent highs. The S&P 500 fell 0.5 per cent, the Dow dipped 0.1 per cent, and the Nasdaq slid 0.9 per cent.

Tech and AI-linked stocks led the retreat, suggesting that even market favourites are not immune to nerves. Broadcom dropped 4.4 per cent, Nvidia fell 1.6 per cent and Micron Technology lost 3.9 per cent. Investors are also bracing for earnings from Alphabet, Amazon, Microsoft and Meta Platforms later on Wednesday.

In currency markets, the US dollar edged up to 159.77 Japanese yen from 159.62 yen, while the euro slipped slightly to USD 1.1701 from USD 1.1712.

For now, markets seem caught between two competing forces: cautious confidence in central bank stability, and a geopolitical overhang that refuses to fade.

With AP/PTI inputs