PSX: KSE-100 sheds nearly 1,500 points as situation remains tense in ME

The Pakistan Stock Exchange (PSX) saw a significant drop in its KSE-100 Index as tensions escalated in the Middle East, with the benchmark index plummeting nearly 1,500 points during early trading on Monday. By 9:40am, the KSE-100 Index was trading at 169,030.57 points, a decline of 1,481.28 points, or 0.87%. Selling pressure was felt across key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, and power generation.

Nevertheless, the index-heavy stocks, such as HUBCO, MARI, OGDC, PPL, HBL, MEBL, MCB, and NBP, traded at a loss. The situation remains tense, with renewed geopolitical tensions between Iran and the United States, as well as the ongoing conflict in the Middle East, contributing to the bearish sentiment among investors. Concerns over maritime security, global trade disruptions, and surging global oil prices have further pressured investor sentiment.

The KSE-100 Index has declined by 4,816.95 points, or 2.7%, week-on-week, to 170,511.86 points by the weekend. Internationally, stock markets in Asia experienced a drop on Monday as supply concerns prompted oil prices to surge once again, while investors anticipated potential interest rate hikes in the United States and Japan. Brent crude oil prices increased by 3%, driven by new strikes on Saudi Arabia and attacks on ships in the Gulf, which heightened concerns about global energy supply disruptions.

A scheduled meeting between Iran and Gulf Arab states in Oman to discuss reopening the Strait of Hormuz was postponed, deepening worries over the potential for prolonged supply disruptions. The U.S. consumer price report, released on Friday, revealed an uncomfortably hot report, raising the probability of a 25 basis points rate hike by the Federal Reserve on Wednesday, potentially marking the first increase since mid-2023.

This would be accompanied by further declines in global equities, with the MSCI's Asia-Pacific index outside Japan slipping by 0.8%, while European indices such as EUROSTOXX 50, DAX, and FTSE futures all declined by 0.5%, 0.4%, and 0.1%, respectively. On Wall Street, S&P 500 futures declined by 0.5%, while Nasdaq futures experienced a steeper decline of 1.1%.