PSX plunges over 3,500 points as Trump’s ‘Stone Age’ threat to Iran rattles markets

Bears dominated the Pakistan Stock Exchange (PSX) on Thursday, with the benchmark KSE-100 plunging nearly 3% in the early trade, mainly due to uncertainty over the regional geopolitical landscape after U.S. President Donald Trump said the United States would continue the war in Iran over the coming weeks and send the country to the “Stone Ages.”

The benchmark KSE-100 Index closed at 152,011 points, marking a decline of more than 3,500 points, or 2.25%, on a day-on-day basis. The market opened on a weak note and remained under sustained pressure throughout the session, with bearish sentiment dominating trading activity.

Investor sentiment was rattled as hopes for a swift end to the Middle East conflict faded when President Donald Trump vowed more aggressive strikes on Iran in an address that disappointed investors hoping for clearer signals of a resolution.

Trump said in a televised speech on Wednesday night that the U.S. military had nearly accomplished its objectives in Iran, but offered no clear timeline for ending the month-long conflict and reiterated threats to bomb the country back into the “Stone Ages.”

This uncertainty triggered a widespread sell-off in key sectors, including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs, and power generation. Index-heavy stocks, including MARI, OGDC, POL, PPL, MCB, MEBL, NBP, and UBL, traded in the red.

On Wednesday, the PSX staged a strong rally, with the benchmark KSE-100 Index surging past the 150,000 mark, with a gain of 6,768.25 points, or 4.55% and closing at the 155,511.57 level, as improved investor sentiment, driven by optimism over geopolitical de-escalation in the Middle East, sparked broad-based buying. 

Media reports suggest that Pakistan has committed to passing on fuel price increases to consumers if fiscal space is insufficient to sustain subsidies, while expanding targeted subsidies and strengthening social protection under its programme with the International Monetary Fund, as inflation rose to 7.3% in March 2026.

The Economic Coordination Committee has directed ministries and divisions to surrender Rs100 billion from Public Sector Development Programme allocations for 2025–26 to be transferred to the Prime Minister’s Austerity Fund.

Globally, stocks slid and oil prices surged after Trump said military operations would be intensified over the next two to three weeks, offering no concrete timeline for ending a conflict that has disrupted global energy markets and raised concerns about economic stability.

U.S. stock futures fell 1%, while European futures declined more than 1.5%. Asian stocks also dropped, with Japan’s Nikkei down 1.8% and South Korea’s Kospi index falling 3.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan was down over 1.5%, with most regional markets in negative territory.

Oil prices climbed nearly 7% on Thursday, with Brent crude futures rising $6.84, or 6.8%, to $108 per barrel by 0643 GMT. U.S. West Texas Intermediate crude futures were up $6.40, or ​6.4%, to $106.52 per barrel.