PSX: Buying returns as KSE-100 gains over 400 points

Buyer sentiment surged at the Pakistan Stock Exchange (PSX) on Tuesday, as the KSE-100 Index climbed over 400 points during the early hours of trading. By 9:45am, the benchmark index stood at 177,444.32, marking a gain of 468.65 points or 0.26%. This buying activity was particularly notable in sectors such as automobile assemblers, cement, commercial banks, fertilizers, oil and gas exploration firms, OMCs, and power generation companies.

Several index-heavy stocks, including HUBCO, MARI, OGDC, PPL, POL, PSO, SSGC, FFC, HBL, MEBL, and NBP, all closed in the green. The Monday's drop in investor sentiment was attributed to escalating geopolitical tensions between the United States and Iran, coupled with a surge in global crude oil prices. This led to a significant decrease in investor confidence at PSX, with the KSE-100 Index falling by 720.83 points, or 0.41%, to close at 176,975.68.

On an international scale, the selling pressure caused global bond yields to reach record highs on Tuesday. This was due to increased fighting in the Middle East, which resulted in oil prices surpassing $90 a barrel, exerting pressure on stock markets worldwide. In the U.S., the 10-year Treasury yield, a key indicator for various asset classes, rose 2.2 basis points to a near 20-month peak of 4.78%.

Similarly, Japan's 10-year benchmark was approaching 3%, a level not observed in a generation. Despite the US futures stabilizing following modest declines in Wall Street indexes, there was a lingering sense of uncertainty ahead of US jobs data release on Friday. This data could potentially trigger an interest rate hiking cycle, starting as early as this month.

Higher oil prices and escalated US-Iran tension have fueled concerns about inflation, which negatively impacts bonds, coinciding with Federal Reserve Chair Kevin Warsh's indication that policy makers might act if price pressures do not subside. His recent speech suggested that policymakers could move if inflation remains a challenge.

Japan's Nikkei slipped 0.2% in early trading, while the Hang Seng Index declined by 0.7%, with the market's mood influenced by the underwhelming performance of clothing retailer Shein Global. Markets are currently pricing in the likelihood of interest rate hikes in New Zealand on Wednesday and Europe next week. Such rate hikes in the U.S. and Japan are considered likely. This story provides an update on the current trading scenario.