Key Takeaways
- The KSE-100 index lost over 6,400 points amid renewed US-Iran fighting.
- Global oil prices hit their highest in four weeks due to heightened tensions.
- Investor sentiment deteriorated as geopolitical uncertainties increased.
The Pakistan Stock Exchange’s (PSX) benchmark index, KSE-100, experienced a significant downturn on Tuesday, losing over 6,400 points. The market opened in the red and saw a steep decline by 2:30pm, closing at 173,518.81 points, down 3.56 per cent from the previous close.
The sharp sell-off was driven by heightened geopolitical tensions after reports of the US reimposing its naval blockade on Iran and conducting airstrikes, while Iran responded with targeted attacks in the Strait of Hormuz. These actions fuelled concerns over regional stability and potential disruptions to global oil supplies, leading to increased risk aversion across financial markets.
Topline Securities Ltd noted that the largest negative contributors were United Bank Limited (UBL), Engro Holdings, Fauji Fertiliser Company, Lucky Cement, and Meezan Bank. These companies collectively shaved 2,057 points off the benchmark index. Awais Ashraf, director of research at AKD Securities, commented on the broad-based selling across cyclical sectors due to heightened uncertainty over the medium-term outlook.
The PSX had already faced pressure on Monday as equity investors grew nervous about developments in the Strait of Hormuz, causing the KSE-100 index to dip below 180,000 points. Despite a supportive macroeconomic backdrop, broad-based profit-taking further exacerbated the decline.
Global oil prices also saw a significant rise, with Brent crude futures up $2.89 or 3.47 per cent at $86.19 per barrel and US West Texas Intermediate (WTI) crude rising $1.53 or 1.96 per cent to $79.67 a barrel by 5pm PKT. These increases were attributed to the heightened tensions between the United States and Iran, which have now pushed oil prices to their highest levels since June 18.
In response to these developments, US stock futures showed mixed performance in early European trading on Tuesday. S&P 500 futures ticked 0.1 per cent lower while Nasdaq futures remained resilient at 0.5 per cent higher. European shares also opened lower as escalating tensions spooked investors.
The market crash followed the US reinstating its naval blockade of Iran, which had already caused pressure on Monday. Analysts noted that the decline was broad-based, with cyclical sectors witnessing the sharpest percentage losses amid heightened uncertainty over the medium-term outlook due to the emerging geopolitical situation.
