PSX volatile as projections favor Trump over Harris in US presidential race

Pakistan Stock Exchange (PSX) experienced volatility on Wednesday amid projections suggesting Donald Trump’s potential victory over Democrat Kamala Harris in the US presidential race.

According to the PSX website, the market opened on a positive note and the benchmark index gained over 500 points, in a bullish run, to reach  92,966.94 during the early hours of trading. 

However, it slipped into the red zone shortly after reports on the US election emerged, with the KSE-100 shedding 282.88 points to close at 92,021.44.

Investors around the world are closely watching the US election for clues on who will become the next president of the world’s biggest economy.

Benchmark stock indexes across Asia were mostly higher on Wednesday, while the US dollar was also up.

On Tuesday, PSX’s KSE-100 closed at an all-time high of 92,304.32 points. 

This ended the stock market’s recent bullish momentum which was mainly driven by increased investor confidence, improved economic indicators, and 250 basis points (bps) rate cut by the central bank. 

On Monday, the SBP reduced the key policy rate by 250 bps from 17.5% to 15%. Many economists were expecting the SBP to cut the policy rate by 200 basis points. This is the fourth consecutive reduction since June 2024.

The Monetary Policy Committee outlined that inflation has declined faster than expected and has reached close to its medium-term target range in October (7.2%). The committee assessed that the tight monetary policy stance continues to play an important role in sustaining the downward trend in inflation.

Last week, the KSE-100 index gained 0.96% week-over-week (WoW). The positive rally was fueled by an anticipated continuation of monetary easing and the country reporting its first-ever quarterly budget surplus in over 20 years of Rs1.7 trillion during the first quarter of FY25, coupled with strong corporate results. 

However, the government missed two of the IMF’s quarterly targets: one for tax collection, marking a shortfall of Rs 90 billion, and another for cash surplus for the provinces, marking a shortfall of Rs 182 billion. 

The headline inflation for October clocked in at 7.2% YoY, with real interest rates comfortably above 10% at current policy rate levels. 

On the macro front, the trade deficit for October clocked in at $1.4 billion, with exports for the month standing at $2.97 billion, up 4.9% MoM.  

Globally, Japan’s benchmark Nikkei 225 stock index was up by 2%, while Australia’s ASX 200 was about 1% higher.

In mainland China, the Shanghai Composite Index was flat, while Hong Kong’s Hang Seng was down by around 2.5%.

Futures trading on the major US stock indexes was pointing sharply higher. That came after the Dow Jones Industrial Average, S&P 500 and Nasdaq all closed more than 1% higher.