PSX reverses early gains, closes in red on oil rally and regional tensions

Early gains at the Pakistan Stock Exchange (PSX) proved short-lived on Wednesday as the market slipped back into the red, with selling pressure wiping out initial momentum and pushing the benchmark index lower during intraday trade.

Investors remained cautious amid uncertainty surrounding the regional geopolitical situation and the continued blockade of the Strait of Hormuz, which has pushed energy prices higher, with oil futures climbing to a one-month high on Wednesday.

According to the PSX website, the market opened on a bullish note, with the KSE-100 rising to an intraday high of 169,686.03, up over 1,200 points in early trade. The momentum later reversed, and by 2:15 p.m., the index had dropped to a low of 165,760.00, down more than 2,600 points from its peak.

At close, the KSE-100 settled at 165,823.87, shedding 2,588 points or 1.54% from the previous close.

Market sentiment has remained under pressure after the State Bank of Pakistan raised its policy rate by 100 basis points to 11.50% on Monday, triggering volatility and broad-based selling.

Losses were recorded across key sectors, including commercial banks, oil and gas exploration companies, oil marketing companies, power generation and refinery. Index-heavy stocks such as ARL, HUBCO, OGDC, PPL, POL, MARI, MCB, MEBL and UBL traded in negative territory.

The decline follows a weak performance on Tuesday, when the KSE-100 Index fell 1,085.12 points, or 0.64 per cent, to settle at 168,412.23, marking a second consecutive day of losses.

Globally, markets found their footing in Asian trading on Wednesday as worries about the Iran conflict and ​health of the AI sector eased, optimism over corporate earnings grew, and attention turned to the Federal Reserve's decision due later.

U.S. President Donald Trump has instructed aides to prepare for an extended ​blockade of Iran, the Wall Street Journal reported late on Tuesday, citing U.S. officials.

Trump will opt ​to continue to squeeze Iran's economy and oil exports by preventing shipping to and from ⁠its ports, the report said. Despite a ceasefire in the U.S.-Israeli war with Iran, the conflict is deadlocked as both ​sides seek a formal end to the fighting.

MSCI's broadest index of Asia-Pacific shares ‌outside Japan reversed earlier losses to rise 0.2%, as gains for stocks trading in Hong Kong steadied the index. Japanese markets were closed for a holiday. S&P 500 e-mini futures edged up 0.2%. 

Oil prices rose nearly 3% on Wednesday, ‌with the Brent contract hitting a one-month high, on media reports the U.S. will extend its blockade of Iranian ports, likely prolonging supply disruptions from the key Middle East producing region. 

Brent crude futures for June rose $3.08, or 2.8%, to $114.34 a barrel ​at 0824GMT, climbing for an eighth day to the highest since March 31. The June contract expires on Thursday and the more active July contract was at $107.08, up 2.6%.

U.S. West Texas Intermediate (WTI) futures for June CLc1 rose $2.75, or 2.8%, to $102.68 a barrel, the ​highest since April 13. The contract has risen for seven out of the last eight days.

Gold edged lower on Wednesday, as higher oil prices fuelled fears ‌of inflation, while investors awaited U.S. Federal Reserve Chair Jerome Powell's comments to gauge the impact of the Iran war on the economy.

Spot gold was down 0.4% at $4,574.26 per ounce, as of 0740 GMT, ​after falling to its lowest level since April 2 in the previous session. U.S. ​gold futures for June delivery fell 0.4% to $4,587.70.

Spot silver was steady at $73.12 per ounce, platinum fell 0.6% to $1,927.70, and palladium was down ​0.4% at $1,453.63.