PSX falls as oil prices surge amid Middle East tensions

Selling pressure persisted at the Pakistan Stock Exchange (PSX) on Tuesday as investors remained cautious over escalating geopolitical tensions in the Middle East,

Karachi: Selling pressure persisted at the Pakistan Stock Exchange (PSX) on Tuesday as investors remained cautious over escalating geopolitical tensions in the Middle East, a sharp rally in global crude oil prices and uncertainty surrounding the upcoming corporate earnings season.

The benchmark KSE-100 Index continued its downward trajectory during intraday trading, reflecting widespread risk aversion across the market. The index dropped to an intraday low of 174,615.03 points, shedding 5,312.01 points, or 2.95%, from the previous close of 179,927.04. It later recovered some losses but remained firmly in negative territory, touching an intraday high of 178,112.04, still lower by 1,815 points, or 1.01%.

Market participants attributed the decline to growing concerns over rising energy prices and the deteriorating security situation in the Middle East, both of which have heightened fears of inflationary pressures and slower economic growth.

A market analyst said investors were closely monitoring developments in the region, as the recent spike in oil prices had significantly weakened sentiment in equity markets. He added that the upcoming corporate results season would play a crucial role in determining the market’s short-term direction, with investors expected to focus on company earnings and future guidance.

The downturn at the PSX mirrored weakness across international financial markets after crude oil prices climbed to their highest levels in nearly a month. Brent crude futures gained around 1.8%, trading near $84.80 per barrel, while US West Texas Intermediate (WTI) crude advanced 2.2% to approximately $79.84 per barrel during Asian trading hours.

Earlier in the session, both benchmark contracts had risen by more than $2 per barrel, extending Monday’s dramatic rally when Brent crude recorded its biggest single-day increase since May 2020.

Oil markets were jolted after the United States intensified military operations against Iran and reinstated a naval blockade targeting Iranian shipping. The situation further escalated as hostilities continued in and around the strategically important Strait of Hormuz, a critical global energy shipping route.

According to international reports, the US military launched a third consecutive night of strikes on Iranian targets, while President Donald Trump announced measures to tighten maritime restrictions on Iranian vessels and proposed imposing a 20% security fee on ships using the Strait of Hormuz.

The conflict also disrupted commercial shipping. Two United Arab Emirates oil tankers reportedly came under missile attack in Omani territorial waters, resulting in the death of one Indian crew member and injuries to several others. Shipping data also indicated that tanker traffic through the Strait of Hormuz had fallen to its lowest level in two months, raising concerns about global energy supplies.

The heightened geopolitical risks weighed heavily on regional and international equity markets. Asian stocks traded lower, with MSCI’s Asia-Pacific index excluding Japan declining around 1.7%, while Japan’s Nikkei 225 slipped 0.8%. US stock futures also pointed to continued weakness after Wall Street recorded broad losses in the previous session.

Investor sentiment was further dampened by comments from US Federal Reserve Governor Christopher Waller, who suggested that additional interest rate increases could become necessary if inflation remained significantly above the central bank’s 2% target. Market participants were also awaiting the release of fresh US inflation data, which could influence the Federal Reserve’s future monetary policy decisions.

The renewed geopolitical tensions had already triggered a sell-off on Wall Street overnight, where the S&P 500 ended 0.8% lower, while the Nasdaq Composite dropped 1.6%, reflecting investor concerns over rising oil prices and global economic uncertainty.

Tuesday’s losses followed another weak session on Monday, when the KSE-100 Index closed at 179,927.04 points, down 2,314.73 points, or 1.27%, amid broad-based selling across key sectors. Analysts