PSX plunges over 1,700 points as US–Iran tensions shatter ceasefire optimism

Bears dominated a volatile session on Monday, with the benchmark KSE-100 Index of the Pakistan Stock Exchange (PSX) plunging over 1,700 points during intraday trading, as investor concerns grew that the ceasefire between the United States and Iran may not hold after Washington said it had seized an Iranian cargo ship attempting to breach its blockade, igniting Tehran to vow retaliation.

According to PSX data, the market opened on a negative note, with the KSE-100 Index falling to 170,625.96, down more than 3,300 points in early trading. The index later recovered some losses and gained over 300 points, but overall it remained under pressure.

Around midday, selling pressure intensified again, pushing the KSE-100 down to 169,226.56, a decline of 4,712.45 points by around 1:10 pm.

Selling was observed across major sectors, including automobile assemblers, automobile parts and accessories, cable and electrical goods, cement, commercial banks, fertilizer, oil and gas exploration companies, oil and gas marketing companies, power generation and distribution, and refineries.

At close, the KSE-100 settled at 172,196.70, down by 1,742.31 or 1% from the previous close. 

Last week, the KSE-100 Index witnessed a strong turnaround and posted a gain of 6,748 points, or 4.0% week-on-week, to close at 173,939, supported by optimism around US–Iran ceasefire developments and easing regional tensions. However, brokerage firms warned that the KSE-100 Index is expected to remain driven by developments in US–Iran talks. 

Today’s downturn comes after the reports that the U.S. military fired on an Iranian-flagged cargo ship headed towards Iran's Bandar Abbas port on Sunday after a six-hour standoff, disabling its engines. 

U.S. Marines then rappelled from helicopters ​onto the vessel, U.S. Central Command said.

"We have full custody of their ship, and are seeing what's on board!" President Trump wrote on social ⁠media.

Iran's military said the ship had been travelling from China. "We warn that the armed forces of the Islamic Republic of Iran will soon respond and retaliate against this armed piracy by ​the U.S. military," a military spokesperson said, according to state media.

Iran also rejected new peace talks with the U.S., its state news agency reported on Sunday, hours after U.S. President Donald Trump said he was sending envoys for talks in Pakistan and would launch new strikes on Iran unless it accepts his terms.

The ceasefire in the ⁠Iran war is due to run until Tuesday. 

The renewed tensions between the US and Iran impacted the global markets, and S&P 500 ​futures fell around 0.7%, a modest move considering the index notched a record closing high on Friday. 

Asia-Pacific markets were mixed, with Australia’s ​S&P/ASX 200 down 0.5% and Japan’s benchmark Nikkei up 0.7%.

Bond markets, which rallied on Friday, retreated.

Brent crude futures rose about 6% to $95.36 a barrel. S&P 500 futures fell around 0.6%, and European futures fell 1.2%. But equity benchmarks in Seoul, Taipei and Tokyo shrugged off risks to advance, with Taiwan's shares touching a record high and the other two not far behind.