Key Takeaways
- The KSE-100 Index fell by over 1,700 points amid escalating US-Iran tensions.
- Key sectors such as automobile assemblers and cement experienced widespread selling.
- Geopolitical uncertainties dampened investor sentiment, leading to a decline in the benchmark index.
Negative sentiment dominated Pakistan’s stock market on Monday as geopolitical tensions between the United States and Iran intensified. The KSE-100 Index, which serves as a key indicator of the overall health of the country's equity markets, experienced a significant downturn, shedding over 1,700 points during the trading session.
At midday, the benchmark index was hovering at 180,535.10, marking a decline of 1,706.67 points or 0.94%. This marked a continuation of the negative trend that began last week following renewed tensions between the two nations, which saw the PSX snap its winning streak and lose 3,130.43 points to close at 182,241.77.
The decline was not limited to one sector; across-the-board selling was observed in key sectors including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs (Oil Marketing Companies), and power generation. Major index-heavy stocks such as HUBCO, MARI, OGDC, PSO, SSGC, SNGPL, MCB, MEBL, NBP, and UBL traded in the red.
Internationally, share markets faced similar pressures with Asia’s major indices sliding on Monday due to heightened fighting in the Gulf. Iran's claim of closing the Strait of Hormuz sent oil prices surging, rekindling inflation risks globally. The dollar strengthened as bond yields rose, reflecting investor sentiment that a Federal Reserve interest rate hike was becoming more likely.
Inflation figures for June are expected to show some cooling in the headline rate of 4.2% due to declining petrol prices. However, this could be partially reversed with the recent rise in oil prices. Brent crude climbed by 4.1% to reach $79.11 a barrel from its recent trough of $70.14, while U.S. crude added 4.1% to $74.37 a barrel.
Equity investors will be closely watching the earnings season, which is set to begin with major banks on Tuesday. Additionally, key companies like Netflix and General Electric are also expected to report their financial results. S&P 500 futures eased by 0.4%, while Nasdaq futures lost 0.9%. In Europe, EUROSTOXX 50 futures and DAX futures both fell by 0.6%, while FTSE futures dipped 0.1%.
Japan’s Nikkei fell by 1.6%, having shed 1.7% the previous week, while MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by 0.9%. South Korea's market, which had been a key focus due to its semiconductor sector, lost almost 8% last week as leveraged bets on semiconductor stocks came under pressure.
