Most equities rise after oil price plunge, US data in focus

Global equities experienced an overall uptick on Wednesday (September 30), following a significant drop in oil prices the previous day. Investors were also preparing for the release of important US inflation data later in the day. The two primary crude oil contracts saw a substantial decline on Tuesday, largely due to speculative talks of an imminent deal to end the US-Iran conflict that would reopen the Strait of Hormuz.

However, these talks have remained stalled, with neither side offering much progress. Nonetheless, news that Saudi Arabia had partially restored the East-West pipeline, which was shut down this month due to drone attacks, bolstered market sentiment. The release of additional oil from US emergency reserves also had a positive impact.

The Saudi pipeline had been a crucial alternative route for oil shipments from the country while the Strait of Hormuz was closed. Both Brent and West Texas Intermediate fell below $90 a barrel, subsequently recovering slightly on Wednesday. Global markets, including Tokyo, Hong Kong, Shanghai, Sydney, Wellington, Taipei, Mumbai, and Jakarta, all saw an increase, albeit with some dip in Seoul, Singapore, Manila, and Bangkok.

London began the day higher, as UK economic growth for the second quarter was revised upwards. Shanghai and Hong Kong also received a slight boost from China's announcement of a fresh stimulus package, along with data indicating a rise in the country's factory activity for the first time since June. Despite the drop in oil prices, the impact on the broader equity market has not been substantial, according to Chris Weston at Pepperstone.

The absence of significant diplomatic progress in the Middle East, combined with shifting oil supply and flows nearing pre-conflict levels, and the US President's decision to release more barrels from the strategic petroleum reserve, have led to a notable shift in oil pricing. Investors are eagerly awaiting the release of US personal consumption expenditure data for October, as it will provide crucial insights into inflation, which is likely to play a significant role during the Federal Reserve's policy meeting at the end of the month.

Although the jobs market remains important, officials are primarily focused on containing inflation. A reading higher than expected could signal a second successive interest rate hike by the Fed. However, New York Fed Chair John Williams offered some reassurance, stating that while a second hike may not be imminent, the September increase provided policymakers with more time to assess the upcoming data.