Shares steadied on Wednesday following a retreat ​in oil prices, but contradictory signals from the US-Israeli war on Iran kept investors anxious over the risks to inflation and global growth.

A ‌pullback in oil came after the Wall Street Journal reported that the International Energy Agency had proposed the largest release of oil reserves in its history to bring down crude prices, providing some relief to battered global stocks while currencies and bonds were little changed.

Brent crude futures swung between gains and losses in volatile trade, falling 0.4% to $87.45 per barrel, while US ​crude was up 0.3% at $83.67 a barrel.

“Markets are presently trading on the news flow and the here-and-now rather than being forward-looking,” said Chidu ​Narayanan, head of APAC macro strategy at Wells Fargo.

“The measures announced, aiming to offset oil supply declines, might be insufficient. ⁠It is likely to help on the margin to assuage some of the fears, but as long as the conflict continues, risk aversion is likely to ​remain elevated.”

Still, regional stocks found some reprieve, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 1.4%, while the Nikkei rose 1.7% and South Korea’s ​Kospi advanced 1.75%.

US stock futures also pushed higher after a mixed cash session overnight, with Nasdaq futures and S&P 500 futures adding about 0.2% each.

EUROSTOXX 50 futures slipped 0.12%, while FTSE futures lost 0.14%.

Investors remain on edge as the Middle East conflict threatens to freeze global energy trade and ignite a price shock – a risk that world leaders are scrambling to address.

Read: PSX rebounds after sell-off, KSE-100 gains nearly 9,700 points

Still, energy ​markets remain hostage to how long – and how intense – the conflict becomes.

“Several major questions loom over the oil market’s trajectory. Chief among them is the ​timing of safe passage for vessels through the Strait of Hormuz, a critical chokepoint for global oil supply,” said Kerstin Hottner, Vontobel’s head of commodities.

“Another concern is the possibility of ‌infrastructure damage… ⁠Even if major hostilities subside, the prospect of ongoing low-level Iranian drone attacks on energy infrastructure could prolong market instability into next year.”

Dollar fever

The dollar held to its gains on Wednesday as investors assessed the fallout from the war, with the greenback proving the safe-haven asset of choice in the ongoing market turmoil.

Against the yen, the dollar was up slightly at 158.15, while the euro and sterling were nursing losses and fetched $1.1633 and $1.3450, respectively.

“You have only one safe asset, which ​has been the US dollar,” said ​Frank Benzimra, head of Asia equity ⁠strategy and multi-asset strategist at Societe Generale.

“Even gold or Treasuries did not play this huge safe-haven role. In the case of Treasuries, because of the inflation concerns, and in the case of gold, because we could see some ​investors selling their gains in gold to offset some losses in the equity market.”

Bond markets have come under pressure ​over the past few ⁠sessions on risks that the prolonged spike in energy prices could stoke inflation and cause central banks across the globe to turn more hawkish.