Brent crude futures declined 2.2% to $101.09 a barrel

Asian shares rallied on Wednesday as oil prices paused gains, with markets turning to central bank meetings to see how policymakers will balance growth and inflation risk amid war in the Middle East.

Brent crude futures declined 2.2% to $101.09 a barrel.

That proved to be a comfort for equity investors, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 1.6% as South Korea surged more than 4%. Nikkei also rallied 2.6%.

Chinese blue-chips bucked the trend with a decline of 0.5%.

Natasha Kaneva, head of global commodities research at JPMorgan, said apparent stability in Brent and WTI reflects a temporary buffer created by regional inventory overhang, benchmark composition and policy intervention.

If the Strait does not reopen, Brent and WTI will ultimately reprice higher as Atlantic basin inventories are drawn down and the global market is forced to clear at a materially tighter supply level, she said.

Reports that Nvidia has won Chinese approval to sell its second-most powerful artificial intelligence chips also boosted sentiment.

Over in Europe, EUROSTOXX 50 futures were up 0.6%.

The Bank of Canada also meets on Wednesday where market participants expect no policy change and wager the next move will be up, with one hike fully priced in by year-end.

In currency markets, the U.S. dollar was down 0.2% to 158.7 yen for a third session of decline. The euro held at $1.1541 after adding 0.3% overnight. Treasuries extended gains, helped by a solid auction of 20-year Treasury bonds. Yields on 10-year Treasury notes declined 2 basis points at 4.1790%, the third session of decline, to move away from a recent high of 4.29%.