Key Takeaways
- The KSE-100 Index dropped by over 6,400 points amid heightened tensions between the US and Iran.
- US President Donald Trump declared an end to the memorandum of understanding with Iran, intensifying market concerns.
- Key sectors such as automobile assemblers and commercial banks saw significant selling pressure.
The Pakistan Stock Exchange (PSX) witnessed a sharp decline in its benchmark KSE-100 Index on Wednesday, with the index shedding over 6,400 points. This dramatic fall came in the wake of US military airstrikes against Iran and the reimposition of crude sales sanctions by the United States.
According to reports from the Pakistan Stock Exchange, at 2pm local time, the KSE-100 Index was trading at 179,792.17 points, down by 6,463.38 points or 3.47% compared to its previous session’s close. The selling pressure extended across various sectors, including automobile assemblers, cement manufacturers, commercial banks, fertiliser producers, oil marketing companies (OMCs), and power generation firms.
Notably, index-heavy stocks such as HUBCO, MARI, OGDC, PSO, SSGC, SNGPL, and WAFI were among those trading in the red. The broader market sentiment was characterized by a cautious approach from investors, who had previously enjoyed gains that brought the KSE-100 near its all-time high on Tuesday.
While the correction in the stock market was significant, investor confidence remained intact due to expectations of strong corporate earnings for the upcoming results season. However, these positive outlooks were overshadowed by the geopolitical tensions between the US and Iran. On Tuesday, PSX closed lower as investors took profits after the benchmark KSE-100 Index hovered near its all-time high during intraday trade.
Internationally, the US military launched a new wave of strikes against Iran on Tuesday, following reports that three tankers were hit by projectiles in the Strait of Hormuz. This development put additional pressure on global markets, with US oil prices jumping nearly 3% and the U.S. dollar reaching its highest levels of the week against most of its peers.
Market analysts noted that these events have increased bets for a September Federal Reserve rate hike to over 67%, up from about 57% on Tuesday, according to the CME FedWatch tool. Investors were also awaiting minutes from the Federal Open Market Committee’s June 16-17 meeting, which was due later in the day, for further insights into interest rate policies under new Fed Chair Kevin Warsh.
US consumers expressed growing concerns about near-term inflation pressures in a New York Fed report released on Tuesday. These economic indicators underscored the complex interplay between geopolitical tensions and market dynamics, highlighting how global events can swiftly impact local stock markets.
