Key Takeaways
- The KSE-100 Index fell by over 2,000 points on Thursday.
- Geopolitical tensions in the Middle East led to widespread panic selling at PSX.
- Brent crude prices rose sharply, affecting global bond markets and interest rate expectations.
The Pakistan Stock Exchange (PSX) experienced a significant downturn on Thursday as geopolitical tensions in the Middle East triggered a sell-off. The benchmark KSE-100 Index dropped by over 2,000 points during opening hours, closing at 181,629.37 points, down 2.48% from its previous day’s value.
According to reports, the renewed strikes on Iran and escalating concerns about a broader regional conflict prompted investors to reduce their exposure, leading to steep declines in key sectors such as automobile assemblers, cement, commercial banks, fertiliser, oil and gas exploration companies, OMCs, and power generation. Index-heavy stocks like HUBCO, KE, MARI, OGDC, PPL, PSO, SNGPL, SSGC, and WAFI traded in the red.
The International Monetary Fund (IMF) has projected Pakistan’s economy to grow by 3.5% in fiscal year 2026-27, falling short of the government’s target of 4%. In its latest World Economic Outlook Update, released on Wednesday, the IMF maintained its GDP growth forecast for fiscal year 2025-26 at 3.6%, reflecting ongoing economic challenges.
Geopolitical tensions in the Middle East also affected global markets. Brent crude futures rose by 0.8% to $78.65 a barrel and were up 9% this week, crossing above $80 a barrel for the first time since June 22. This rise in oil prices contributed to inflation fears and negatively impacted global bond markets.
In response to these developments, international markets showed mixed reactions. Asian shares climbed on Thursday as semiconductors got a respite from heavy selling. However, gains were capped by the surge in oil prices, which also affected Wall Street initially but eventually saw a small gain of 0.2% on the Nasdaq.
The U.S. military’s continued strikes on Iran to keep open the Strait of Hormuz further heightened concerns about regional stability and economic implications. President Donald Trump’s comments regarding the end of the interim agreement with Iran added to market volatility, although he later stated that a full-fledged war was not expected, which helped soothe some investor fears.
The sell-off at PSX reflects the broader impact of geopolitical events on financial markets. Investors remain cautious amid ongoing tensions and potential economic repercussions. The steep decline in the KSE-100 Index underscores the vulnerability of Pakistan’s stock market to external factors.
