Asian equities slide as Brent steadies above $100 and US yields near 2023 highs
Rising oil prices above $100 a barrel and US Treasury yields hovering near their 2023 peak pressured Asian markets, raising inflation concerns for Pakistan and weighing on most PSX sectors.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher oil prices and US yields pressure inflation and the rupee, hurting Power, Cement, Transport and Banks while only modestly benefiting Oil & Gas; avoid buying broadly.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- PowerNegatively affected
- CementNegatively affected
- TransportNegatively affected
- BanksNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Power, Cement, Transport, Banks — Negative · Do not buy. PSX tickers: OGDC, PPL. Higher oil prices and US yields pressure inflation and the rupee, hurting Power, Cement, Transport and Banks while only modestly benefiting Oil & Gas; avoid buying broadly.
Full Story
Open on Business Recorder## Market backdrop
Asian stock indexes fell on Thursday after Brent crude futures nudged above $101 per barrel, a level not seen since July. The price rise stems from intensified attacks on shipping in the Middle‑East conflict, especially between Saudi Arabia and Yemen’s Houthis, which have heightened worries about global energy supplies.
## US bond market pressure
The US 10‑year Treasury yield held at 4.84%, barely slipping from a recent peak. The Treasury’s announcement of a $6 billion buy‑back of longer‑dated bonds disappointed investors who had hoped for a larger stimulus to lower yields. Higher yields are feeding inflation expectations worldwide.
## Implications for Pakistan
Elevated oil prices and stubborn US yields translate into higher import costs for Pakistan, putting pressure on the rupee and consumer prices. The outlook for inflation remains upside‑biased, which could prompt the State Bank of Pakistan to keep policy rates tight.
## Sectoral impact on PSX
Higher energy costs are likely to squeeze profit margins for power generators, cement producers, and transport firms that rely heavily on diesel and fuel. Conversely, domestic oil‑and‑gas companies stand to gain from stronger crude prices, improving their earnings outlook.
## Upcoming catalysts
Investors are awaiting key US inflation data (producer‑price and consumer‑price indexes) and central‑bank decisions from the Federal Reserve, European Central Bank and Bank of Japan later this week. The results will shape expectations for further rate moves and could amplify the current market volatility.
## Analyst view
Market strategists note that September historically presents a challenging season for equities. With a “cocktail of headwinds” – higher oil, rising yields and looming policy decisions – risk‑off sentiment is likely to dominate until clearer guidance emerges.