European shares dip as higher crude revives inflation worries; Novartis drags
Rising oil prices and inflation concerns weighed on European markets, while Novartis reported a drug trial failure, signalling broader risk sentiment that could affect Pakistani equities.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher oil prices raise inflation risk and geopolitical tension, likely hurting banks and broader market sentiment; avoid buying, watch oil‑gas sector for limited upside.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- BanksNegatively affected
- Oil & GasNegatively affected
- MarketsNegatively affected
Companies
Companies Mentioned
- PPL· Negatively affected · Do not buy
Mentions in This Briefing
Sectors: Banks, Oil & Gas, Markets — Negative · Do not buy. PSX tickers: PPL. Higher oil prices raise inflation risk and geopolitical tension, likely hurting banks and broader market sentiment; avoid buying, watch oil‑gas sector for limited upside.
Full Story
Open on Business Recorder## Market Overview
European equity indices slipped on Tuesday amid rising oil prices that rekindled inflation fears and heightened concerns over a prolonged Middle‑East conflict. The pan‑European STOXX 600 fell 0.2% to 648.41 points by 0705 GMT. Germany’s DAX dropped 0.3%, France’s CAC 40 slipped 0.4%, while London’s FTSE remained flat after a quiet session on Monday due to a U.S. public holiday.
## Oil Price Surge and Geopolitical Tension
Brent crude futures climbed to $98.5 a barrel after Iran warned it would retaliate against any new attacks by targeting energy infrastructure across the Gulf, including U.S. oil and gas assets. The higher crude price is expected to lift global inflation expectations and could pressure emerging‑market currencies, including the Pakistani rupee.
## Pharmaceutical Setbacks
Swiss drugmaker Novartis saw its shares tumble 8.8% after announcing that late‑stage testing of its del‑desiran drug for myotonic dystrophy failed to meet the primary endpoint. This follows a separate disappointment the previous day when its experimental cholesterol drug pelacarsen also missed its trial goals.
## Other Movers
Swiss pharma Sandoz rose 2.9% after stating it aims to more than double net sales between 2025 and 2035. Italy’s Poste Italiane sweetened its takeover bid for Telecom Italia as it seeks to secure control of the former state‑owned phone operator.
## Implications for Pakistan
Higher crude prices could benefit Pakistan’s oil and gas sector by improving revenue expectations for companies such as Pakistan Petroleum Ltd. However, the accompanying inflation worries and heightened geopolitical risk may weigh on the broader market, especially banks and consumer‑sensitive sectors, as cost pressures rise and the rupee faces potential depreciation.