Stocks tumble at PSX, KSE-100 down 4,600 points amid US-Iran tensions

Massive selling pressure was observed at the Pakistan Stock Exchange (PSX) after the US military launched airstrikes against Iran and reimposed crude sales sanctions, with the benchmark KSE-100 Index settling with a loss of over 4,600 points on Wednesday.

Selling accelerated later in the session after US President Donald Trump said on Wednesday that the memorandum of ​understanding signed with Iran to end the conflict ‌was “over”, adding he didn’t want to engage with Tehran.

The market opened on a relatively stable note and initially hovered above the 184,000-point level during the morning session. However, sentiment deteriorated sharply in the early afternoon, triggering aggressive across-the-board selling. The benchmark index lost more than 5,500 points within a short span, slipping below the intraday low of 179,504.34.

Following the steep decline, value hunters emerged at lower levels, helping the market recover part of its losses. The KSE-100 rebounded by nearly 2,100 points from its intraday low before the recovery lost momentum.

The index then moved sideways during the final hour of trading and settled around the 181,600-point level.

At close, the benchmark KSE-100 Index settled at 181,629.36 points, down 4,626.19 points or 2.48%.

On Tuesday, PSX closed lower as investors resorted to profit-taking after the benchmark KSE-100 Index hovered near its all-time high during intraday trade. Despite the correction, expectations of strong corporate earnings for the upcoming results season continued to underpin investor confidence and helped limit the extent of losses.

The benchmark KSE-100 Index settled at 186,255.55 points, down 1,199.14 points or 0.64%.

Internationally, the ​US military unleashed a new wave of strikes against Iran on Tuesday and revoked ​a licence allowing the country to sell oil after three tankers were ⁠hit by projectiles in the Strait of Hormuz, putting pressure on an already fragile ​ceasefire.

US oil prices jumped nearly 3% in early trade, extending the previous session’s ​gains, while the U.S. dollar clung to its highest levels of the week against most of its peers.

Markets have increased their bets for a September Federal Reserve rate hike to over 67% ​chance, up from about 57% on Tuesday, the CME FedWatch tool showed.

Investors also ​awaited minutes of the Federal Open Market Committee’s June 16-17 meeting, due later on Wednesday, for fresh ‌clues ⁠on the interest rate path under new Fed Chair Kevin Warsh.

US consumers grew more concerned about near-term inflation pressures in June, a New York Fed ​report showed on Tuesday.