The Pakistan Stock Exchange (PSX) came under heavy selling pressure on Monday as escalating tensions between the United States and Iran, coupled with a sharp rise in global oil prices, weakened investor confidence and pushed the benchmark index significantly lower during intraday trading.
Market participants reacted cautiously to the worsening geopolitical situation in the Middle East, fearing that prolonged instability could fuel inflation, increase Pakistan’s import bill and put additional pressure on the country’s external finances.
KSE-100 Index falls more than 2,700 points
The benchmark KSE-100 Index dropped to an intraday low of 179,448.52 points, falling 2,793.25 points, or 1.53%, from Friday’s close of 182,241.77.
During the session, the index recovered some losses but remained firmly in negative territory, touching an intraday high of 180,744.71, which was still 1,497.06 points (0.82%) below the previous closing level.
The sharp decline erased much of the gains recorded in the previous trading session, when the market had risen by 982.10 points (0.54%) to close at 182,241.78.
Geopolitical tensions drive market decline
Market analysts attributed the decline primarily to renewed military hostilities between the United States and Iran, which have intensified uncertainty across global financial markets.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, said the escalation in the Middle East prompted investors to reduce exposure to equities.
According to Mehanti, rising crude oil prices have increased concerns about inflation and the potential impact on Pakistan’s balance of payments and external account, encouraging investors to adopt a risk-averse approach.
PSX Surges on Hopes of Near-Term Resolution to Iran Conflict
Brokerages expect volatility to continue
Brokerage firms believe the stock market is likely to remain sensitive to developments in both the geopolitical and economic environment.
Ismail Iqbal Securities said investor sentiment would continue to be influenced by any fresh developments related to the Middle East conflict and Pakistan’s macroeconomic outlook.
Meanwhile, Huzaifa Riaz, Director at Mayari Securities (Pvt) Limited, said the market opened lower as investors reacted to the renewed US-Iran confrontation and the resulting spike in oil prices.
However, he noted that buying interest emerged at lower levels as some investors anticipated that diplomatic efforts could eventually help ease regional tensions.
Oil prices surge amid Hormuz concerns
Global oil prices climbed by more than 4% on Monday after fresh fighting between the United States and Iran raised fears of disruptions to energy supplies.
The latest escalation followed attacks involving commercial vessels in the Strait of Hormuz, one of the world’s most important energy shipping routes. Iran’s Revolutionary Guards announced that the strategic waterway would remain closed “until further notice,” although the United States Central Command (CENTCOM) maintained that the strait remained open for lawful maritime traffic.
The uncertainty surrounding oil shipments pushed both major crude benchmarks sharply higher, increasing concerns that sustained energy price inflation could force central banks to maintain tighter monetary policies or raise interest rates.
Investors remain focused on global developments
Analysts say the direction of the Pakistan Stock Exchange in the coming sessions will largely depend on developments in the Middle East and their impact on global commodity markets.
While bargain hunting may provide temporary support after Monday’s decline, investors are expected to remain cautious until there is greater clarity on the geopolitical situation and its implications for oil prices, inflation and Pakistan’s broader economic outlook.
