Buying activity returned to the Pakistan Stock Exchange (PSX) on Wednesday, with the benchmark KSE-100 Index rebounding strongly in early trading after suffering a sharp decline in the previous session. By 9:40am, the KSE-100 Index had climbed 592.08 points, or 0.33%, to 180,438.76 points, reflecting renewed investor interest in major listed companies. The recovery was broad-based, with buying activity reported across several important sectors, including automobile assemblers, cement manufacturers, commercial banks, fertiliser companies, oil and gas exploration firms, oil marketing companies (OMCs) and power generation companies. Several index-heavy stocks also contributed to the early gains. HUBCO, MARI, POL, PPL, HBL, MCB, MEBL, NBP and UBL were among the prominent stocks trading in positive territory. Investors reassess geopolitical risks The improved sentiment at the local bourse came as Pakistan signalled that diplomatic efforts between the United States and Iran could potentially lead to an arrangement aimed at reducing tensions. Defence Minister Khawaja Asif told Bloomberg News on Tuesday that developments over the previous few days suggested that the two sides were moving closer to a possible understanding. According to the minister, the situation appeared to be developing in favour of a peace arrangement or agreement, raising hopes that easing geopolitical tensions could provide some relief to global energy markets. The prospect of reduced tensions is particularly important for Pakistan, where movements in international crude prices can have a significant impact on import costs, inflation expectations, the current account and overall investor sentiment. PSX suffers sharp decline in previous session The Wednesday rebound followed a difficult session at the PSX on Tuesday, when investors remained cautious amid geopolitical uncertainty and a rise in international oil prices. The KSE-100 Index ended Tuesday’s trading at 179,846.68 points, losing 1,463.60 points, or 0.81%. The decline reflected renewed selling pressure as market participants assessed the possible economic consequences of heightened tensions and uncertainty surrounding the outlook for a US-Iran agreement. Wednesday’s early recovery suggests that some investors were willing to return to equities as concerns over a possible escalation appeared to ease, although market sentiment remained sensitive to developments in global markets. Global markets remain focused on inflation data International markets were also trading cautiously on Wednesday, with oil and gold prices moving higher while Asian equities posted modest gains. Investors were closely watching the latest US consumer price index (CPI) data for indications about the future direction of US monetary policy. The inflation figures are expected to provide important clues about the Federal Reserve’s interest-rate outlook and the timing of any potential rate changes. Higher-than-expected inflation could reinforce expectations of tighter monetary policy for longer, while softer price pressures could strengthen the case for eventual rate reductions. In currency markets, the Japanese yen remained largely stable against the US dollar after giving back much of its recent gains following rare intervention in foreign-exchange markets by Japan and the United States. Geopolitical developments also continued to weigh on market sentiment. Reports of separate attacks involving shipping and the Iran-aligned Houthi movement added to concerns surrounding maritime security and energy supplies, while a North Korean missile launch further unsettled investors in Asia. Oil and gold prices rise Crude oil prices advanced amid continued concerns about supply disruptions and geopolitical risks. US crude futures increased 0.89% to $83.94 per barrel, while Brent crude rose 0.78% to $89.60 per barrel. Gold, another traditional safe-haven asset, also gained ground. Spot gold increased 0.46% to $4,387.03 per ounce as investors continued to monitor geopolitical developments and the direction of US monetary policy. In Asian equities, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5%. Japan’s Nikkei index remained broadly flat after markets reopened following a holiday.
