Escalating Pakistan-Afghanistan tensions take a toll on equity market

Escalating tensions at the western border between Pakistan and Afghanistan weighed heavily on the equity market on Friday, with the benchmark index losing more than 800 points at closing amid broad-based selling.

According to the PSX website, the market started the session on a bearish trend, and the KSE-100 plunged to the 165,811.87 level, shedding over 3,000 points, or 1.82% from the previous close of 168,893.08. Losses were recorded across major sectors, including commercial banks, fertiliser, oil and gas exploration companies, automobile assemblers, cement, oil marketing companies, power generation and refineries.

At the end of the session, the KSE-100 index settled at 168,062.16, down by 830.92 points, or 0.49%.

The decline follows Pakistan government statements that over 130 Afghan Taliban operatives were killed and more than 200 were injured after Pakistan’s security forces responded to cross-border firing. According to the information minister, strikes were carried out in Kabul, Paktia and Kandahar, with multiple posts and military installations targeted.

The downturn comes a day after the PSX staged a sharp recovery. On Thursday, the KSE-100 Index closed at 168,893.09 points, gaining 4,266.79 points or 2.59% on broad-based buying in ready and futures markets. The sharp recovery on Thursday came after the SECP dismissed market rumours about a possible reversal of the recently implemented T+1 settlement regime.

Globally, Asian markets remained under pressure on Friday amid concerns over technology stock valuations and ongoing geopolitical tensions in the Middle East. MSCI’s broad Asia-Pacific index excluding Japan fell 0.4%, while Japan’s Nikkei declined 0.8%.

U.S. equity futures also edged lower during Asian trading, with S&P 500 E-minis down 0.41% and Nasdaq 100 E-minis off 0.36%. Gold held steady following recent gains, while the yen and U.S. Treasuries rose.