PSX drops over 3,700 points as investors turn cautious on geopolitical risks

Selling pressure gripped the Pakistan Stock Exchange (PSX) on Friday as the KSE-100 Index dropped more than 3,700 points at close, with investors turning cautious on geopolitical risks a day after a sharp rally.

Across the board sell-off was seen in major sectors including oil and gas exploration companies, power generation, refineries, automobile assemblers, cement, commercial banks, and fertilisers. Index-heavy stocks, including HUBCO, MARI, POL, PPL, MCB, MEBL, NBP, and UBL were trading lower.

At the close, the benchmark index settled at 157,496.10, down by 3714.57 points or 2.3% from the previous close.

The decline followed a strong comeback on Thursday when the KSE-100 closed at 161,210.68, up 5,433.46 points, or 3.49%, in one of the strongest rallies in recent sessions.

Global markets were also under pressure on Friday, with Asian equities falling and heading toward their sharpest weekly drop in six years, while oil prices were on track for their biggest weekly rise in about three years as the Middle East conflict showed few signs of easing.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last down 0.4% and was set for a weekly fall of 6.6%, which would be its steepest weekly decline since March 2020. Japan’s Nikkei was down 0.5% and on course for a 6.5% weekly drop, while South Korea’s Kospi was also headed for its largest weekly fall in six years with a 10.5% slide.

Oil markets remained the main channel of impact. Brent crude futures were trading around $83 per barrel after being near $69 about a week earlier, while US crude hit a 20-month high earlier in the week. Both benchmarks were set to gain more than 15% for the week, their largest weekly rise since February 2022.

Investors shifted toward cash as they priced in the risk that the conflict could last longer than initially expected. Markets also began factoring in firmer rate expectations from major central banks, amid concerns that a sustained rise in energy prices could feed back into inflation.

US Treasury yields rose about 18 basis points over the week, their biggest weekly increase in nearly a year, while the dollar was set for its largest weekly gain in about 16 months. The broader selloff also prompted profit-taking, including in technology-heavy markets, as investors looked to cover losses elsewhere.