PSX surges over 5,000 points as easing Middle East tensions lift investor confidence
The benchmark KSE-100 Index rallied sharply after the US and Iran paused military action, while falling oil prices and expectations of a steady interest rate boosted market sentiment.
Investors watch the KSE-100 Index surge during early trading at the Pakistan Stock Exchange.
KARACHI: The PSX opened the trading week with a powerful rally on Monday, as the benchmark KSE-100 Index climbed more than 5,000 points during intraday trading amid improving global sentiment and easing geopolitical tensions.
The KSE-100 Index gained 4,501.33 points by 9:50am, reaching 175,522.53 from the previous close of 171,021.20. By 10:30am, the benchmark index had extended its gains to 5,068.88 points, touching 176,090.08.
Improved global outlook boosts market
Market analysts linked the rally to the pause in military action between the United States and Iran.
Awais Ashraf, Director of Research at AKD Securities, said investors welcomed signs of a possible diplomatic breakthrough in the Middle East.
He said the pause in hostilities raised hopes that shipping through the Strait of Hormuz would resume without further disruption.
AJK elections begin as over 1.4 million voters head to polls in Mirpur division
Investors await SBP policy decision
Ashraf also said calmer geopolitical conditions increased expectations that the State Bank of Pakistan (SBP) would leave its policy rate unchanged at the Monetary Policy Committee meeting.
He added that the central bank was likely to adopt a cautious approach while assessing developments in the Middle East and the economic impact of recent floods.
However, he noted that easing inflation, a stable external account, weaker economic indicators and slower money supply growth continued to support the case for future monetary easing.
Falling oil prices strengthen sentiment
Financial services firm Mettis Global also attributed the market rally to declining global oil prices and easing geopolitical tensions.
Meanwhile, international crude prices fell sharply after the US and Iran paused military operations.
Brent crude dropped more than 7% during early trading and briefly slipped below $90 a barrel. At the same time, West Texas Intermediate traded around $85.45 per barrel.
Lower oil prices improved investor confidence because they reduce import costs for Pakistan and ease inflationary pressure.
Market rebounds after difficult week
The latest rally followed a weak performance last week.
The KSE-100 Index had fallen 4,782 points, or 2.7%, as rising tensions between the US and Iran and higher global oil prices weighed on investor sentiment.
Nevertheless, Monday’s sharp recovery reflected renewed optimism after diplomatic efforts reduced fears of a wider regional conflict.
