PSX dips nearly 1,000 points as Middle East tensions weigh on investor sentiment

On Tuesday, the Pakistan Stock Exchange's main KSE-100 index plummeted nearly 1,000 points due to heightened tensions in the Middle East. The index fell by 1,904.31 points, or 1.10 per cent, to close at 171,731.76 points, down from its previous close of 173,636.07. The market plummeted to a low of 171,490.63 points around 1:30pm before slightly recovering midday losses, ultimately closing 993.91 points (0.57pc) lower than the prior day's close.

Awais Ashraf, director of research at AKD Securities, pointed out that "prolongation of tensions" between the United States and Iran is adversely affecting investor sentiment. "Furthermore, the rise in oil prices is exacerbating the pressure," he added. However, Ashraf noted that "robust macroeconomic indicators, along with recent leveraging of the international Eurobond market, provide some respite to policymakers compared to previous shocks."

The recent Houthis assaults on Saudi Arabia's energy installations have further aggravated regional tensions, as global oil prices surged to multi-week highs. World oil prices climbed on Tuesday, nearing $100 a barrel, and stock markets largely declined due to the intensifying Middle East conflict. Brent crude oil reached $99.22 a barrel, the highest since July 24, while US West Texas Intermediate crude hit $94.60 a barrel, its peak since June 8.

The Middle East's political instability and uncertainty have negatively influenced investor sentiment, resulting in profit-taking across the board throughout the week. On Monday, the stock market failed to maintain the mild recovery observed over the weekend, slipping by 1,692.74 points to settle at 173,636.08.