Key Takeaways
- The Pakistan Stock Exchange’s benchmark index rebounded sharply, gaining over 1,000 points.
- Investor sentiment improved following US President Trump's decision to back off tariffs on Strait of Hormuz traffic.
- Lower-than-expected US inflation reduced concerns about further Federal Reserve rate hikes.
The Pakistan Stock Exchange (PSX) witnessed a significant turnaround on Wednesday, with its benchmark index, the KSE-100, gaining more than 1,000 points during early trade. The initial surge saw the index rise by 3,133 points at 10:06am from the previous close of 173,518.81 points. By 10:14am, it had slightly moderated but remained up by 2,664.88 points.
However, the gains were short-lived as the index reversed course and ended the day up by 1,091.77 points at 12:54pm. Mettis Global, a web-based financial portal, attributed this rebound to value buying after heavy selloffs in the previous session.
Awais Ashraf, director of research at AKD Securities, explained that investor sentiment had turned positive following US President Donald Trump’s decision to replace proposed 20 per cent tariffs on ships navigating the Strait of Hormuz with investment commitments from Gulf Cooperation Council (GCC) countries. He stated: 'The KSE-100 index was rebounding from steep losses as investors engaged in value buying after heavy selloffs.'
Additionally, lower-than-expected US inflation had eased concerns over further Federal Reserve rate hikes, improving the outlook for capital flows into frontier markets and reducing pressure on the Pakistani rupee. This positive economic environment contributed to the stock market’s recovery.
The rebound came after a tumultuous Tuesday when the KSE-100 index fell below 174,000 points under extreme selling pressure. Equity investors lost Rs706 billion in a single session amid persistent panic stemming from geopolitical developments that had driven up oil prices following Trump’s announcement of imposing a 20 per cent charge on ships navigating the Strait of Hormuz.
However, this tariff was later backtracked by Trump, who said the strait would remain open to all shipping traffic except that of Iran. This decision further bolstered investor confidence and contributed to the market’s recovery.
Meanwhile, oil prices extended their gains as Trump reimposed a naval blockade on all Iranian ports and Tehran launched strikes on US infrastructure in the region. Brent futures climbed 99 cents, or 1.2 per cent, to $85.72 a barrel at 0400 GMT, while West Texas Intermediate futures gained 64 cents, or 0.8 per cent, to $79.98 a barrel.
The KSE-100 index was rebounding from steep losses as investors engaged in value buying after heavy selloffs.
Awais Ashraf, Director of Research at AKD Securities
