Global capital markets entered 2026 larger but more concentrated. The Global North retains advantages in market depth, reserve currencies, institutional capital and financing costs.
The US-Iran conflict, ongoing since late February 2026, has driven sharp oil spikes, elevated Treasury yields, and episodic volatility on the U.S. equity markets.
The ongoing US-Iran conflict, marked by strikes, Strait of Hormuz disruptions, and fragile ceasefire talks, has driven sharp commodity volatility in mid-2026. Oil prices surged toward $89–100+/bbl on supply fears, while gold and metals showed mixed safe-haven dynamics.
Early 2026 has seen emerging-market (EM) capital flows moderate amid heightened geopolitical tensions, trade fragmentation, and Middle East uncertainties. Portfolio inflows slowed from 2025 peaks, with differentiation favoring policy-credible economies.
CPEC Phase II (2025–2029) marks a strategic pivot from infrastructure-heavy lending to diversified, private-sector-led financing. Chinese policy banks, multilateral institutions, and emerging capital-market tools are enabling $8.5 billion in B2B deals and key projects like ML-1 railway. For Pakistan, this architecture balances debt sustainability with industrial and green growth under the five new corridors.
Q1 2026 delivered sharp volatility across global capital markets and commodities, driven by Middle East geopolitical tensions and shifting monetary expectations. While advanced equities corrected amid risk-off flows, commodities saw divergent moves -oil spiking on supply fears and precious metals consolidating from 2025 highs. For Pakistan, this environment underscores both risks to the PSX and hedging potential via PMEX amid improving macro fundamentals.
