PSX rallies over 5,000 points as regional tensions ease

The Pakistan Stock Exchange started the week with a strong rally on Monday.

The Pakistan Stock Exchange started the week with a strong rally on Monday.

The benchmark KSE-100 Index gained more than 5,000 points during intraday trading. The sharp rise came as investors welcomed the pause in fighting between the United States and Iran.

The index opened with strong buying activity. By 9:50am, it had risen 4,501 points to reach 175,522.53 points. The previous close was 171,021.20 points.

The upward movement continued during the morning session. By 10:30am, the index had gained 5,069 points and reached 176,090.08 points.

The improved geopolitical situation boosted investor confidence. The United States and Iran have paused their military strikes. The development has raised hopes for renewed diplomatic efforts.

Investors also expect the easing of tensions to support shipping activity through the Strait of Hormuz.

The waterway is important for global energy supplies. Any prolonged disruption can push oil prices higher and increase pressure on economies that depend on imported fuel.

The latest development also affected global oil markets. Crude prices fell sharply as investors reacted to the temporary halt in hostilities.

Brent crude briefly dropped below $90 per barrel. It fell more than 7% at one stage during early trading.

US West Texas Intermediate crude also declined. The fall in international oil prices could provide some relief to Pakistan’s economy.

Pakistan spends a significant amount on energy imports. Lower oil prices can therefore help reduce pressure on the country’s import bill and external account.

Market analysts said the improvement in geopolitical conditions could also influence the State Bank of Pakistan’s monetary policy decision.

Awais Ashraf, director of research at AKD Securities, said investors were expecting the central bank to maintain the policy rate.

The State Bank is also expected to assess developments in the Middle East. The impact of recent floods on Pakistan’s economy will also remain under consideration.

Analysts said the continuing decline in inflation and a relatively comfortable external account could support monetary easing in the coming months.

However, economic activity and money supply trends remain important factors for policymakers.

The strong rally follows a difficult week for the PSX. The KSE-100 Index had fallen by around 2.7% last week.

The index lost 4,782 points and closed at 171,021.20 points.

Rising tensions between the United States and Iran had increased uncertainty in financial markets. Higher international oil prices also added pressure.

Investors had remained cautious because of concerns that the conflict could expand across the region.

Monday’s sharp recovery shows how quickly market sentiment can change when geopolitical risks decline.

Despite the strong gains, analysts remain cautious about the outlook.

Further developments between Washington and Tehran will remain important. Global oil prices will also influence investor sentiment.

The State Bank’s monetary policy decision is another key factor for the market.