Oil Above $100 Triggers Global Equity Sell-Off
Brent crude breaches $108, pushing the US 10-year Treasury yield to 4.97%. Indian indices post their steepest weekly drop since July.
Brent crude oil traded above $108 per barrel in Asian sessions, nearing the $110 mark. This price surge forced the 10-year US Treasury yield to 4.97%, its highest level since October 2023. The spike in energy costs directly impacted equity markets across Asia.
Indian stocks fell for a fifth consecutive week. The Sensex index dropped 2.3% over the period, while the Nifty 50 declined 2.1%. These marks represent the steepest weekly losses for these benchmarks since late July. Friday’s session saw the Nifty 50 reach a three-month low before a partial recovery.
Energy costs drive yield spikes
Escalating tensions in West Asia drove the crude oil rally. Attacks on Saudi energy infrastructure and US-Iran friction pushed Brent above $100 for the first time in weeks. Vinit Bolinjkar of Ventura Research noted that this move coincided with hawkish repricing in US interest rates. Markets now price in a 71% probability of a 25-basis-point Fed rate hike next week.
Sector rotation hits real estate
Rising global yields triggered a risk-off move in rate-sensitive sectors. The BSE Realty index fell 6.4% this week, leading the decline among Indian sectoral indices. Real estate is a high-duration sector, making it vulnerable to rising construction costs and tighter liquidity. The BSE IT index dropped 5.3% as investors questioned the impact of AI on billing models.
Foreign investors exit Indian markets
Foreign portfolio investors net sold 13,138 crore rupees in Indian equities in September. This outflow unwinds the inflows recorded during July and August. The combination of elevated US yields, a firmer dollar, and high crude prices creates a risk-off environment for emerging markets. Most global equity benchmarks closed in the red, with India’s Hang Seng rival falling 3.1%.
