Intense selling amid geopolitical tensions, KSE-100 down over 2,300 points

Negative sentiment engulfed the Pakistan Stock Exchange (PSX) amid escalating tensions between the US and Iran, with the benchmark KSE-100 Index shedding over 2,300 points on Monday.

The market opened on a relatively firm note, with the index briefly climbing to an intra-day high of 181,148.26. However, the early gains proved short-lived as selling pressure intensified, dragging the benchmark into negative territory.

The benchmark index traded range-bound through the late morning and early afternoon before witnessing a sharp sell-off in the final hours of trading. The benchmark fell from near the 181,000-point level to an intra-day low of 179,448.52, erasing more than 1,500 points within a short span.

Although the market recovered modestly from its day’s low, the rebound lacked momentum and settled at 179,927.04, down by 2,314.73 points or 1.27%.

“The local bourse came under renewed selling pressure as escalating tensions in the Middle East dampened investor sentiment. Fresh attacks involving the US and Iran reignited concerns over a broader regional conflict, pushing international crude oil prices higher and triggering a risk-off sentiment across the market,” brokerage house Topline Securities said in its post-market report.

“The decline was further exacerbated by broad-based profit-taking following the market’s recent rally, as investors opted to lock in gains despite an otherwise supportive macroeconomic backdrop.”

On the index contribution front, heavyweight stocks UBL, MEBL, FFC, HUBC, and LUCK emerged as the biggest laggards, collectively dragging the benchmark down by approximately 845 points, Topline said.

During the previous week, the PSX snapped its winning streak as renewed geopolitical tensions following fresh US-Iran military strikes dampened investor sentiment, prompting widespread selling and dragging the benchmark index lower.

The KSE-100 Index declined by 1.7% on a week-on-week basis, losing 3,130.43 points to close at 182,241.77 points.

Internationally, share markets slid in Asia on Monday as fighting intensified ​in the Gulf and Iran claimed to have closed the vital Strait of Hormuz, sending oil prices surging and rekindling inflation risks globally.

The dollar rose with bond yields as investors narrowed the odds of a Federal Reserve interest rate hike, just a day before Chair Kevin Warsh is due to face Congress for the first time in his new role.

Inflation figures for June on Tuesday could show some cooling in the headline rate of 4.2% as petrol prices decline, though some of that will reverse now that oil ​is rising anew.

Brent crude climbed 4.1% to reach $79.11 a barrel, up from the recent trough of $70.14, while U.S. crude added 4.1% to $74.37 a barrel.

U.S. officials ​said around 20 vessels had been escorted through the strait in the previous 24 hours, though ship tracking sites showed little ⁠traffic moving.

Equity investors will be hoping the earnings season proves as upbeat as forecast, with the major banks kicking off from Tuesday, while Netflix and General Electric are ​also on the docket.

S&P 500 futures eased 0.4%, while Nasdaq futures lost 0.9%. In Europe, EUROSTOXX 50 futures and DAX futures both fell 0.6%, while FTSE futures dipped 0.1%.

Japan’s Nikkei fell 1.6%, having shed ​1.7% last week, while MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.9%.

South Korea’s formerly red-hot market shed 5.4%, and will be in focus, ​having lost almost 8% last week as leveraged bets on semiconductor shares came under pressure. The market has emerged as a key global barometer for chip-sector sentiment, and further losses could ‌ripple out ⁠more broadly.

Meanwhile, the Pakistani rupee posted marginal gain, appreciating 0.01%, against the US dollar in the inter-bank market on Monday. At close, the local currency settled at 278.02, a gain of Re0.03 against the greenback.

Volume on the all-share index decreased to 845.28 million from 948.78 million recorded in the previous close.

The value of shares declined to Rs35.55 billion from Rs38.41 billion in the previous session.

Cnergyico PK was the volume leader with 158.52 million shares, followed by F .Nat.Equities with 64.23 million shares, and Blue-Ex Limited with 43.87 million shares.

Shares of 497 companies were traded on Monday, of which 128 registered an increase, 335 recorded a fall, and 34 remained unchanged.