PSX faces heavy selling as KSE-100 index drops over 1,300 points

KARACHI: Selling pressure intensified at the Pakistan Stock Exchange (PSX) on Tuesday as investor sentiment weakened amid growing uncertainty over the prospects of a peace agreement between the United States and Iran and the reopening of the strategically important Strait of Hormuz.

The benchmark KSE-100 Index came under pressure during the trading session, losing more than 1,300 points as investors remained cautious and reduced exposure to major stocks across several sectors.

At around 2pm, the KSE-100 Index stood at 179,996.62 points, showing a decline of 1,313.66 points, or 0.72%, from the previous close.

The market witnessed broad-based selling, with several major sectors contributing to the decline. Automobile assemblers, cement companies, commercial banks, fertiliser manufacturers, oil and gas exploration firms and oil marketing companies (OMCs) remained under pressure.

Several index-heavy stocks also traded in negative territory. Prominent companies including HUBCO, Mari Petroleum (MARI), Oil and Gas Development Company (OGDC), Fauji Fertilizer Company (FFC), Habib Bank Limited (HBL), MCB Bank, Meezan Bank (MEBL) and United Bank Limited (UBL) were among the stocks weighing on the benchmark index.

Previous session also ends lower

The latest decline follows a weak close in the previous trading session. On Monday, the PSX initially moved higher but lost momentum during the second half of the session as investors opted to book profits in heavyweight shares.

The KSE-100 Index eventually closed at 181,310.28 points, down 119.74 points, or 0.07%.

The continued weakness suggests that investors are closely monitoring developments in international markets, particularly the situation surrounding oil supplies and the Strait of Hormuz.

US-Iran tensions keep markets on edge

Global financial markets remained unsettled on Tuesday as hopes for an agreement between Washington and Tehran appeared to fade. Negotiations aimed at ending the conflict and restoring normal shipping through the Strait of Hormuz have encountered fresh difficulties.

US President Donald Trump on Monday responded to Iran’s conditions for a possible peace agreement by putting forward his own demands, including calls for compensation related to deaths and losses associated with wars, attacks and protests.

The tougher rhetoric has raised concerns that diplomatic efforts could take longer, potentially prolonging disruptions around the crucial maritime route.

The Strait of Hormuz is one of the world’s most important energy corridors, and prolonged disruption to shipping through the waterway could have significant consequences for crude oil supplies and global energy prices.

Oil prices climb to highest level since July 31

The uncertainty surrounding the situation was reflected in international oil markets. Brent crude futures climbed to around $88 per barrel, while US West Texas Intermediate crude futures rose to approximately $82.45 per barrel.

Both benchmarks reached their highest levels since July 31 after recording gains of roughly 5% during Monday’s trading session.

Higher oil prices are a major concern for economies that depend heavily on imported energy. For Pakistan, sustained increases in global crude prices could increase the country’s import bill and place additional pressure on external accounts, inflation and domestic fuel prices.

The rise in energy prices is also being closely watched by investors because higher input costs can affect corporate profitability and influence monetary policy expectations.

Asian markets remain cautious

The uncertainty was not limited to Pakistan. Asian equity markets moved within a narrow range as investors assessed the potential impact of rising energy prices on inflation and economic growth.

MSCI’s broadest index of Asia-Pacific shares outside Japan moved between gains and losses before trading modestly higher. South Korea’s Kospi also recorded a slight increase.

However, the escalation in tensions around the Gulf kept overall market sentiment fragile, with investors remaining wary of further developments that could affect energy supplies and global trade.

US stock futures were also slightly positive on Tuesday. Nasdaq futures rose around 0.28%, while S&P 500 futures gained approximately 0.1%, following a weaker session on Wall Street on Monday.

Inflation data in focus

Investors are also awaiting the latest US consumer price data, which could provide further clues about the direction of interest rates and inflationary pressures in the world’s largest economy.

The increase in crude oil prices has added another element of uncertainty ahead of the inflation report. A sustained rise in fuel and energy costs could complicate efforts to bring inflation closer to central-bank targets.

For Pakistani investors, the combination of geopolitical uncertainty, higher global oil prices and pressure on heavyweight shares is likely to remain a key factor influencing trading sentiment in the near term.