PSX falls over 2,700 points as US-Iran conflict

Pakistan's stock market witnessed heavy selling pressure on Monday as escalating military tensions between the United States and Iran, coupled with a sharp rise in international oil prices,

Pakistan’s stock market witnessed heavy selling pressure on Monday as escalating military tensions between the United States and Iran, coupled with a sharp rise in international oil prices, triggered widespread investor concerns over inflation and the country’s economic outlook.

The benchmark KSE-100 Index at the Pakistan Stock Exchange (PSX) suffered significant losses during intraday trading, reflecting the cautious mood among investors amid growing geopolitical uncertainty.

During the session, the index dropped to an intraday low of 179,448.52 points, declining 2,793.25 points, or 1.53%, from the previous close of 182,241.77. Although the market recovered some losses later in the day, the intraday high remained at 180,597.14 points, still showing a decline of 1,644.63 points, or 0.90%.

Market analysts attributed the sharp decline to mounting fears that the widening conflict in the Middle East could disrupt global energy supplies, fuel inflation and place additional pressure on Pakistan’s already fragile external account.

Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, said investors reacted negatively to the latest developments in the region, with heightened geopolitical risks prompting widespread profit-taking and defensive selling.

According to Mehanti, the surge in global crude oil prices has intensified concerns over Pakistan’s import bill, inflationary pressures and the country’s balance of payments, encouraging investors to reduce exposure to equities.

Brokerage firm Ismail Iqbal Securities also warned that market sentiment is expected to remain fragile as long as geopolitical tensions persist. The firm noted that investors are likely to closely monitor both international developments and domestic macroeconomic indicators before making fresh investment decisions.

Huzaifa Riaz, Director at Mayari Securities (Pvt) Limited, said the market opened sharply lower after renewed military action between the United States and Iran sent oil prices soaring, prompting investors to adopt a cautious approach.

However, he observed that buying interest emerged at lower levels, suggesting some investors are optimistic that diplomatic efforts could eventually reduce tensions and stabilise global markets.

The decline in Pakistani equities came as international oil prices surged by more than 4% following a fresh escalation in hostilities between Washington and Tehran.

Global energy markets reacted strongly after renewed military exchanges raised fears over the security of shipping through the Strait of Hormuz, one of the world’s most critical oil transit routes. Any prolonged disruption in the waterway could significantly affect global crude supplies and increase energy costs worldwide.

Reports indicated that US forces launched another round of military strikes on Sunday after renewed clashes in the Gulf region. The escalation followed an attack on a commercial vessel in the Strait of Hormuz, forcing its crew to abandon the ship after it caught fire.

Iran’s Revolutionary Guards reportedly declared that the strategic waterway would remain closed until what it described as the end of American military intervention in the region. In contrast, the United States Central Command maintained that the Strait of Hormuz remains open for lawful international shipping operations.

Although US officials stated that nearly 20 vessels had safely crossed the strait under military escort during the previous 24 hours, shipping activity remained limited, reflecting ongoing security concerns among commercial operators.

The sharp fall on Monday erased a portion of the gains recorded in the previous trading session. On Friday, the KSE-100 Index had ended 982.10 points, or 0.54%, higher at 182,241.78, supported by improved investor sentiment and selective buying across key sectors.