Asian equities rebound while oil climbs on US‑Iran tensions
Asian stock markets rallied on a strong US jobs report, but oil prices rose after US and Iranian forces clashed in the Gulf, raising inflation concerns and prompting expectations of tighter monetary policy.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Positive · Buy bias
Oil & Gas sector likely to benefit from higher crude prices – Buy bias on related tickers.
Sectors & Direction
Desk read
Desk call: Buy bias · Positively affected
- Oil & GasPositively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas — Positive · Buy bias. PSX tickers: OGDC, PPL. Oil & Gas sector likely to benefit from higher crude prices – Buy bias on related tickers.
Full Story
Open on Business Recorder## Market Overview
Asian equity indices recovered on Monday after a robust US employment report signalled solid global growth and reduced the probability of an imminent rate hike. The MSCI Asia‑Pacific index (excluding Japan) gained 0.9%, with Japan’s Nikkei up 2.0% and South Korea’s KOSPI rising 3.0%.
## Oil Price Surge
Tensions in the Gulf escalated after US forces struck three Iranian tankers and Iran’s Revolutionary Guard launched ballistic missiles at two US Navy vessels. Tehran announced it would soon declare a restricted zone outside the Strait of Hormuz. Brent crude rose 0.2% to $96.45 a barrel, while US West Texas Intermediate climbed 0.4% to $91.85 a barrel.
## Inflation and Central‑Bank Outlook
Higher oil prices add to inflationary pressures ahead of the US August CPI release. The European Central Bank is expected to lift rates to 2.75% on Thursday, with futures indicating a 75% chance of a further hike to 3.0% by year‑end. In the US, markets price a 58% probability of a Fed rate increase on September 16 and a 70% chance of another move in October.
## Currency and Bond Markets
The US dollar index held near 99.1, while the euro stayed around $1.1614. Treasury 10‑year yields hovered at 4.784%, near their highest level since late 2023, keeping equity valuations under pressure.
## Implications for Pakistani Investors
Higher global oil prices are likely to boost earnings for Pakistan’s listed oil and gas companies, offsetting some of the downside from rising inflation expectations. Investors should monitor the upcoming US CPI data and any further escalation in the Gulf, as these could influence both commodity prices and monetary‑policy trajectories.
## Outlook
With oil prices trending upward and central banks signalling more aggressive tightening, the risk‑on sentiment that lifted Asian equities may be tempered. Market participants should stay alert to developments in the Gulf and upcoming inflation data, which will shape the risk environment for Pakistani equities.