PSX: KSE-100 settles nearly 2,300 points lower on political uncertainty, higher oil prices

The Pakistan Stock Exchange (PSX) remained under strong selling pressure throughout Monday’s session amid escalating geopolitical tensions and increasing political noise at home, with the benchmark KSE-100 Index settling nearly 2,300 points lower.

The benchmark index opened near the 167,900 level and initially moved lower, with brief attempts at recovery failing to sustain momentum. Selling intensified towards midday, pushing the index below 166,000 and to an intraday low of 165,764.20 around 1pm.

The KSE-100 staged a modest recovery in the afternoon, briefly moving back above 166,000, but renewed selling erased most of those gains before the end of the session.

At close, the benchmark index settled at 165,867.31, down 2,288.18 points or 1.36%.

Analysts attributed the selling pressure to both global and domestic factors.

“Local political uncertainty, coupled with elevated oil prices, is weighing on investor sentiment and driving selling pressure across the market,” Saad Hanif, Head of Research at Ismail Iqbal Securities, told Business Recorder.

“The ongoing political noise has further encouraged a cautious approach, while higher oil prices are adding to concerns over inflation and macroeconomic stability,” he added.

Sana Tawfik, Head of Research at Arif Habib Limited, also echoed similar sentiments.

“Going forward, the market direction will be set by where oil prices head on the global front and whether political noise settles on the domestic front,” she said.

“Beyond that, the most important trigger will be the direction of the Monetary Policy Statement, whether the policy rate is kept unchanged or revised,” she added.

Selling was seen in key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, power generation and refineries. Index-heavy stocks, including PRL, NRL, HUBCO, MARI, OGDC, PPL, HBL, MEBL, NBP and UBL, traded in the red.

During the previous week, the PSX suffered a notable setback as stalled US-Iran negotiations, a global sell-off in sovereign fixed-income markets that pushed US Treasury yields to their highest levels since 2002, and a widening domestic trade deficit weakened investor risk appetite, sending the benchmark KSE-100 Index down 2,609.74 points, or 1.5%, to close at 168,155.48 points.

Internationally, stocks were off to a strong start on Monday while the dollar edged lower and bonds steadied, as investors trimmed ​bets on an aggressive policy tightening cycle by the Federal Reserve following cooler-than-expected US jobs data.

Trading was thin in Asia with holidays ‌in China, South Korea and Australia’s New South Wales, leaving markets to take their cue from Wall Street’s moves on Friday.

Data last week showed US job growth slowed more than expected in September, and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another rate hike from the Fed this month off the ​table.

Investors are now pricing in ​just a 22% chance that the Fed could raise rates this month, as compared to a 64% chance a week ago, according to the CME FedWatch ​tool.

The growing prospect of a Fed pause this month helped Japan’s Nikkei rise 2% early in the session, while Australian stocks added 0.5% and MSCI’s broadest index of Asia-Pacific shares outside Japan ticked 0.15% higher.

Nasdaq futures and S&P 500 futures advanced 0.3% and 0.1%, respectively, while EUROSTOXX 50 futures gained 0.3% and FTSE futures tacked on 0.4%.