The Pakistan Stock Exchange (PSX) came under heavy selling pressure on Thursday as escalating tensions between Iran and the United States and rising global oil prices weighed on investor sentiment.
The benchmark KSE-100 Index fell more than 3,000 points during the session, hitting an intraday low of 168,471.78 points before recovering slightly. The index eventually closed at 168,865.04 points, down 3,078.55 points or 1.79%.
The index opened near Wednesday’s closing level and initially climbed to an intraday high of 171,945.83 points. However, selling pressure soon intensified, pushing the index into the 170,500–170,900 range.
The decline accelerated during the afternoon session, with the market facing particularly strong selling pressure in the final trading hour.
Analysts attributed the sharp decline primarily to renewed geopolitical tensions and higher international oil prices.
Sana Tawfik, Head of Research at Arif Habib Limited, said renewed tensions between the United States and Iran over the past few days had increased uncertainty in financial markets.
She noted that oil prices had crossed the $100-per-barrel level following the latest attacks, raising concerns about inflation and economic stability.
“The combination of heightened geopolitical tensions and rising oil prices has consequently created selling pressure in the market,” Tawfik said.
Investors are also closely watching the State Bank of Pakistan’s (SBP) upcoming monetary policy announcement, scheduled for Monday.
Tawfik expects the central bank to maintain the current policy rate. However, she said the recent increase in domestic fuel prices has heightened investor attention toward the monetary policy outlook.
The government recently raised domestic fuel prices amid higher international crude prices. Investors will therefore look for signals from the SBP regarding future interest rate decisions and their potential impact on the economy.
The latest decline follows another weak session on Wednesday, when the KSE-100 Index dropped 698.56 points or 0.40% to close at 171,943.60 points.
The consecutive declines reflect growing concerns over the potential economic impact of the escalating Middle East conflict, particularly through higher energy costs and inflationary pressures.
Pakistan also said on Thursday that officials had not discussed a military response under the Makkah agreement in connection with Houthi attacks on Saudi Arabia. However, the country said it would take action when the “time comes.”
Investor concerns were also visible across international markets, with Asian stocks declining amid escalating tensions in the Middle East and oil prices remaining above $100 per barrel.
Brent crude futures climbed to around $101.40 per barrel in early trading after crossing the $100 level on Wednesday for the first time since July.
Higher oil prices have increased concerns over inflation and potential supply disruptions, prompting investors to adopt a more cautious approach.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined around 1%, while Japan’s Nikkei and South Korea’s KOSPI also fell by more than 1%.
Investors are additionally awaiting key US inflation data, which could influence expectations for the Federal Reserve’s future monetary policy.
US Treasury yields remained elevated, with the benchmark 10-year Treasury yield at 4.8406% after reaching its highest level since 2023 in the previous session.
The combination of geopolitical uncertainty, higher oil prices and monetary policy concerns is likely to remain a key driver of market sentiment in the near term.
