Key Takeaways
- KSE-100 Index drops nearly 1,500 points amid heightened tensions in the Middle East.
- Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf trigger selling pressure.
- Global oil prices surge, pushing down stock markets across Asia and Europe.
The Pakistan Stock Exchange (PSX) witnessed a significant downturn as the KSE-100 Index shed nearly 1,500 points in the opening minutes of trading on Monday. At 9:40am, the benchmark index stood at 169,030.57, down by 1,481.28 points or 0.87%. This decline was attributed to renewed geopolitical tensions, particularly following Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf.
Selling pressure was widespread across key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, and power generation. Notable heavyweights such as HUBCO, MARI, OGDC, PPL, HBL, MEBL, MCB, and NBP traded in the red, reflecting the broader market sentiment.
The situation in the Middle East has been a significant factor, with concerns over maritime security and global trade disruptions. The conflict has pushed the KSE-100 Index down 4,816.95 points, or 2.7% week-on-week, to 170,511.86 points by the weekend.
Internationally, share markets experienced a downturn as oil prices spiked. Brent crude climbed 3%, driven by new strikes on Saudi Arabia and the Gulf, which tested global energy supplies. An attack on a Saudi oil pipeline and an advance by Yemen’s Houthis threatened to exacerbate wartime disruptions to global energy supplies.
The postponement of a meeting in Oman between Iran and Gulf Arab states to discuss a deal on opening the Strait of Hormuz further heightened tensions. With shipping through the strait and the Bab el-Mandeb under threat, analysts predict oil prices could remain elevated for an extended period, stoking inflation globally.
In Asia, share markets, including the MSCI’s broadest index of Asia-Pacific shares outside Japan, slipped 0.8%. In Europe, EUROSTOXX 50 futures lost 0.5%, while DAX futures fell 0.4% and FTSE futures dipped 0.1%. On Wall Street, S&P 500 futures lost 0.5%, while Nasdaq futures fell 1.1%. Brent futures were last up 2.6% at $107.36 a barrel, having gained almost 9% last week, while U.S. crude rose 2.4% to $102.48 a barrel.
The United States Consumer Price Index (CPI) report, which showed an uncomfortably hot inflation rate, led markets to price in an 86% chance of the Federal Reserve lifting rates by 25 basis points on Wednesday, with another hike expected by December. This would be the first hike since mid-2023.
The global economic landscape remains volatile, with ongoing geopolitical tensions and rising oil prices creating a challenging environment for investors. The PSX and KSE-100 are likely to remain under pressure as long as the situation in the Middle East remains tense.
