Oil minister of Iraq, Adel Abdul Mahdi was able to fuel an equities rebound overnight after hinting that Saudi Arabia and Russia could come to an agreement on oil production and perhaps begin the process of bringing about a managed end to the deeply damaging supply war of the last 14 months.
WTI surged some 3.7% in the aftermath although the enthusiasm waned during the Asia session to send the US benchmark back below $31/barrel. The minister referenced only that the two are more flexible about cooperation adding that "this flexibility should be finalized, and we should hear some solid suggestions coming from all parties."
However, that was enough for markets to grasp hold of, leading the Dow Jones to its strongest gain in seven weeks. The Nikkei 225 also caught the mood for a near 3% rise and the Hang Seng was up approximately 1.7%.
It was a different story for the Shanghai Composite Index extending a sharp fall on Tuesday to dip below 2,650 for a 3% fall and a 13-month low before returning back above 2,700 later in the day.
The continued concerns over Chinese demand fueled perhaps by Apple's overnight statement admission that iPhone sales could be in decline, although Apple chief executive Tim Cook emphasized that the Chinese market remains at the heart of the innovator's future growth plans.
Tonight's Federal Open Markets Committee meeting will have markets on edge with most hoping for a dove-like performance from the Fed after the turmoil that has predominated in January. They will probably get it — to a point at least — but the Fed seems to have a clearer idea where it is going in 2016, despite market tremors.
The normalization process is in motion and will continue this year. True to form, don't expect the Fed to entirely rule out a March move on rates even if the market has it only priced at a 25% chance.