The Pakistan Stock Exchange (PSX) experienced a sharp decline on Monday, as surging oil prices, rising government bond yields, and escalating geopolitical tensions in the Middle East spurred investor anxiety over imported inflation and external account pressures.
KSE-100 Index Suffers Major Losses
The benchmark KSE-100 Index swung between a high of 151,813.61 (up 106.10 points, 0.07%) and a low of 144,656.97 (down 7,050.54 points, 4.65%) compared to the previous close of 151,707.51. Overall, the index suffered its steepest intraday loss in months, reflecting widespread selling pressure across key sectors.
Ahsan Mehanti, CEO of Arif Habib Commodities, attributed the fall to multiple factors: “Stocks witnessed selling amid concerns for Middle East conflict impacting industrial output and surging interest rates. Surging government bond yields and higher crude oil prices impacting the external account played a catalyst role in bearish activity at PSX.”
Oil Prices Surge Amid Middle East Tensions
Oil prices climbed sharply as the conflict in the Middle East entered its fifth week. Yemen’s Houthi rebels reportedly fired cruise missiles and drones at strategic sites in Israel, raising concerns over disruptions around the Red Sea and Strait of Hormuz. Saudi Arabia has rerouted much of its oil exports through the Red Sea to avoid Hormuz, pushing Brent crude near $117 per barrel—its highest level earlier this month.
Geopolitical risks were further amplified by statements from US President Donald Trump, who suggested the US could seize oil in Iran and take Kharg Island easily, while Iran’s parliament speaker warned of secret US plans for a ground attack.
Foreign Investor Outflows Intensify
Foreign investors also retreated amid heightened global risk sentiment. According to State Bank of Pakistan (SBP) data, overseas investors withdrew a net $177.9 million from T-bills as of March 19, compared with $31.2 million in February. They also sold $21 million in Pakistan Investment Bonds (PIBs) and $148.7 million from PSX portfolios, taking total outflows to $348 million across T-bills, PIBs, and equities.
Rising Inflation Adds to Market Concerns
Domestic inflation continues to pressure markets. The Sensitive Price Indicator (SPI) rose 0.97% in the week ending March 26 to 345.45 points, up 8.24% year-on-year, according to the Pakistan Bureau of Statistics (PBS).
Meanwhile, last Friday, the KSE-100 Index had already extended losses, shedding 1,200.45 points (0.79%) to close at 151,707.52 from 152,907.97, trading between 153,660.89 and 151,457.95.
Iran Conflict Sends Oil Prices Soaring as Stocks Slide and Dollar Strengthens
The combination of rising oil prices, higher bond yields, foreign capital outflows, and Middle East tensions created a perfect storm for the PSX, triggering one of the largest intraday drops in recent times. Investors remain cautious, closely monitoring both global geopolitical developments and domestic economic indicators, as external pressures continue to impact Pakistan’s financial markets.
