KARACHI: The Pakistan Stock Exchange (PSX) witnessed extreme volatility at the start of the week as rising geopolitical tensions in the Middle East triggered panic selling. The benchmark KSE-100 Index plunged nearly 9% in early trading before staging a sharp recovery following a temporary market halt.
Sharp early decline
At 9:22am, the KSE-100 Index fell to 152,991.15 points, down 15,071.01 points, or 8.97%, from the previous close of 168,062.16.
The steep drop followed an escalation in military tensions involving the US, Israel, and Iran, which unsettled global financial markets and pushed oil prices higher.
Trading halted after KSE-30 drop
As selling intensified, trading was suspended after the KSE-30 Index declined by 5%, triggering an automatic market halt under PSX regulations.
In a notice, the exchange stated:
“All TRE Certificate Holders are hereby informed that due to a 5% decline in the KSE-30 index from the previous trading day’s close, a Market Halt has been triggered as per PSX Regulations, and all equity-based markets are suspended accordingly.”
Trading resumed at 10:22am after a 45-minute suspension. The market rebounded strongly, with the index recovering more than 6,000 points from the day’s low.
By 11:05am, the KSE-100 had climbed back to 158,897.54 points, though it remained down 9,164.62 points, or 5.45%.
Oil shock and regional tensions weigh on sentiment
Analysts attributed the heavy selling to geopolitical uncertainty and fears of economic fallout, particularly from rising oil prices.
Higher crude prices pose a significant risk to Pakistan’s already fragile external position. As an import-dependent economy, Pakistan remains vulnerable to sustained increases in energy costs.
In global markets:
- Brent crude rose 4.5% to $76.07, briefly crossing $82 before retreating.
- US crude gained 3.9% to $69.59.
- Gold prices increased by 1%.
Investor attention remains focused on the Strait of Hormuz, a key shipping route that handles roughly 20% of global seaborne oil trade. Although the waterway has not been formally closed, heightened tensions and shipping risks have intensified supply concerns.
Broad-based selling across sectors
The sell-off at the PSX was widespread, with heavy losses across major sectors, including:
- Automobile manufacturers
- Cement
- Commercial banks
- Fertilizers
- Oil and gas exploration
- Oil marketing companies (OMCs)
- Power generation
- Refineries
Index-heavy stocks such as HBL, MCB, MEBL, MARI, OGDC, POL, PPL, HUBCO, and ARL traded lower in early hours, further pressuring the benchmark.
Market participants described the situation as “panic mode,” citing leveraged positions and uncertainty over how long the regional conflict may persist.
Outlook: Volatility may continue
Financial experts warn that volatility is likely to persist in the near term, largely dependent on developments in the Middle East and movements in oil prices.
A prolonged surge in crude prices could fuel global inflationary pressures, posing serious challenges for import-dependent economies like Pakistan.
For now, investors remain cautious as the benchmark index attempts to stabilize after one of its most turbulent sessions in recent history.
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