Bloodbath at PSX as KSE-100 loses 6,400 points over renewed US-Iran fighting

The Pakistan Stock Exchange’s (PSX) benchmark index lost more than 6,400 points on Tuesday as equities experienced a massive meltdown amid renewed fighting between the United States and Iran.

The KSE-100 index opened in the red and had lost 3,464.89 points at 10am, dropping to 176,462.15 points from the previous close of 179,927.04.

During the day, the market witnessed minor fluctuations, followed by a steep decline after 2:30pm.

Finally, the index closed at 173,518.81 points, down 6,408.23 points (3.56 per cent) from the previous close.

The decline came as global oil prices rose to their highest in four weeks on Tuesday, as the US reimposed its naval blockade of Iran while the two countries stepped up attacks in the Strait of Hormuz, heightening uncertainty about energy flows.

Brent crude futures were up $2.89, or 3.47pc, at $86.19 per barrel at 5pm PKT, while US West Texas Intermediate crude rose $1.53, or 1.96pc, to $79.67 a barrel.

Oil prices are now at their highest since the two countries signed a memorandum of understanding to end the war on June 18.

Topline Securities Ltd noted that the sharp sell-off was driven by “heightened geopolitical tensions after the reported collapse of the interim peace arrangement between the US and Iran”.

“Investor sentiment deteriorated following reports that the US reimposed a naval blockade and conducted airstrikes, while Iran responded by targeting additional oil tankers transiting the Strait of Hormuz,” the brokerage house said.

It observed that the escalation fuelled concerns over regional stability, potential disruptions to global oil supplies, and increased risk aversion across financial markets, prompting broad-based selling at the PSX.

The largest negative contribution to the index came from United Bank Limited (UBL), Engro Holdings, Fauji Fertiliser Company, Lucky Cement and Meezan Bank, which “collectively shaved 2,057 points off the benchmark index”, Topline noted.

Awais Ashraf, director of research at AKD Securities, also noted that the market crash followed the US reinstating its naval blockade of Iran.

“The decline is broad-based, with cyclical sectors witnessing the sharpest percentage losses amid heightened uncertainty over the medium-term outlook due to the emerging geopolitical situation,” he said.

The PSX had come under pressure on Monday as equity investors grew nervous over developments in the Strait of Hormuz, dragging the benchmark KSE-100 index below the psychological barrier of 180,000 points.

The benchmark KSE-100 index remained under pressure throughout the session, touching an intraday low of 2,793 points before closing at 179,927, down 2,314 points or 1.27pc.

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

World stocks mixed

US stock futures were mixed in choppy trading on Tuesday after Trump’s announcement of the US naval blockade and as investors picked through the earnings reports of Wall Street’s biggest banks.

S&P 500 futures ticked 0.1pc lower in early European trading while Nasdaq futures remained a resilient 0.5pc higher.

European shares opened lower as escalating US-Iran tensions spooked investors, scrutinising quarterly earnings from companies such as oil major BP and telecom equipment maker Ericsson to gauge the conflict’s impact on corporate health.

The pan-European STOXX 600 index slipped 0.4pc, dragged down by travel and leisure which was last down 2pc.

Following a volatile trading session in Asia, MSCI’s broadest index of world shares edged into the negative as European market trading got underway.

Chinese shares surged in earlier trading after export and import data for June released on Tuesday surpassed economists’ expectations. They closed 2.15pc higher.

South Korean shares rose 0.7pc. Stocks in Taiwan fell 1.42pc on the day.

“China’s exports and imports surged to the highest levels since the pandemic-skewed 2021, as the tech boom supports growth on both fronts,” ING analysts wrote in a research note.

Overnight, stocks on Wall Street sold off. The S&P 500 closed 0.8pc lower and the Nasdaq Composite fell 1.6pc. S&P 500 futures ticked 0.1pc lower in early European trading while Nasdaq futures remained a resilient 0.3pc higher.

The US dollar index, which measures the greenback’s strength against a basket of six currencies, nudged 0.1pc lower to 101.16, trading around its highest levels of the month.

Gold was up 0.5pc at $4,020.34.

In Tokyo, the Nikkei 225 closed around 0.7pc higher after Finance Minister Satsuki Katayama said Japan may consider adjusting the strategy of the giant Government Pension Investment Fund if the investment environment changed sharply, without giving further detail. ...