Asian shares wobble as oil climbs and yields rise ahead of Fed and BOJ meetings
Rising crude prices and higher US Treasury yields pressured Asian markets, with implications for Pakistan’s oil‑and‑gas and banking sectors as investors brace for imminent US and Japan rate decisions.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher yields and rate‑hike expectations pressure banks while oil gains are limited, so overall risk is negative – avoid buying broad market exposure.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- BanksNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Banks — Negative · Do not buy. PSX tickers: OGDC, PPL, HBL, MCB. Higher yields and rate‑hike expectations pressure banks while oil gains are limited, so overall risk is negative – avoid buying broad market exposure.
Full Story
Open on Business Recorder## Market backdrop
Asian equity markets showed limited movement on Tuesday as investors digested renewed Middle‑East tensions, a jump in oil prices and the prospect of tighter monetary policy from the United States and Japan. MSCI’s broadest Asia‑Pacific index outside Japan slipped 0.12%, while Japan’s Nikkei managed a modest 0.19% gain after early losses.
## Oil price surge and geopolitical risk
The Houthis launched a fresh attack on Saudi Arabia, and Riyadh accused Iran‑backed fighters in Iraq of striking an east‑west pipeline that could shave up to 4% off global oil supply. The Gulf states also delayed scheduled talks with Tehran. These supply concerns lifted U.S. crude by 1.27% to $102.68 a barrel and Brent by 1.21% to $106.96 a barrel.
## Rate‑rise expectations
The Federal Open Market Committee began its two‑day meeting with markets pricing a 90% chance of a 25‑basis‑point hike – the Fed’s first increase since mid‑2023. Analysts noted that lingering inflationary pressure from higher energy prices could keep policy tighter for longer. Overnight, the 10‑year U.S. Treasury yield touched 5%, its highest level since 2023, while Germany’s 10‑year yield rose above 3.51% – a peak not seen since 2009.
## Bank of Japan outlook
The BOJ is widely expected to lift its policy rate by 25 basis points to 1.25% and signal further tightening to support the yen, which has been buoyed by recent intervention after flirting with a 40‑year low.
## Currency and commodity moves
The dollar index inched up 0.05% to 99.53, the euro slipped 0.03% to $1.1543, and the yen weakened 0.17% to 154.61 per dollar. Spot gold fell 0.15% to $4,291.59 an ounce, while silver dropped 0.31% to $63.03 an ounce.
## Implications for Pakistan
Higher crude prices are likely to benefit local oil‑and‑gas producers, boosting revenue for companies such as Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL). Conversely, rising global yields and the prospect of tighter U.S. monetary policy could increase borrowing costs for Pakistani banks and raise inflationary pressures, weighing on the broader market sentiment.
## Outlook
Investors should monitor the Fed’s decision later this week and any further developments in the Middle East, as both will shape the direction of oil prices and interest‑rate expectations, which in turn will influence Pakistan’s equity market dynamics.