PSX slides over 2,800 points on US-Iran escalation fears, oil rally

Bears tightened their grip at the Pakistan Stock Exchange (PSX) as the selling pressure intensified on Thursday, on a report that the US is ‌considering potential military action against Iran to break the deadlock in negotiations to end the war, increasing concerns of more supply disruptions to already curtailed Middle East energy exports, and pushing oil prices higher.

Heightened regional uncertainty, coupled with the recent rate hike by the State Bank of Pakistan, weighed on investor sentiment, sending the benchmark KSE-100 Index down to 162,337.00 at the open, a drop of more than 3,300 points.

Selling pressure deepened as the session progressed, with the index falling to an intraday low of 160,391.18 around 11:30 am, down more than 5,300 points, while trading in a range of 160,391.18 to 164,357.47.

On Wednesday, the stocks remained under sustained selling pressure, as cautious investor sentiment amid rising oil prices and geopolitical concerns dragged the market lower. The benchmark KSE-100 Index fell sharply by 2,588.35 points, or 1.54%, to close at 165,823.88.

According to an Axios report, US President Donald Trump is slated to receive a briefing on Thursday on plans for a series of military strikes ​on Iran in hopes it will return to negotiations on its nuclear programme. 

Talks to resolve the ​conflict have deadlocked, with the U.S. insisting on discussing ‌Iran's alleged ⁠nuclear weapons programme and Iran demanding some control over the strait and reparations for damage from the war.

Globally, Asian shares fell on Thursday as oil prices vaulted to four-year highs due to the risk that the U.S. may strike Iran ‌again. Global oil ​benchmark Brent crude futures rose as high as 6% to $126.41 a barrel, the loftiest since March 9, 2022, but by 1230 GMT were down $4.13, or 3.5%, to $113.90. The prompt contract for June delivery expires on Thursday. ​The more active July contract was at $108.83, down $1.61, or 1.5%.

WTI crude futures were down $1.96, or 1.8%, at $104.92. The contract reached $110.93 earlier, the highest since April 7.

MSCI's broadest index of Asia-Pacific shares outside Japan slid 1%, but was still set for a 15% gain this month. Japan's Nikkei fell 1.4% but was up 16% in April. 

South Korea's KOSPI hit another all-time high before turning 0.8% lower. China's blue chips were flat, and Hong Kong's Hang Seng index dropped 1.2%.

European markets performed a sharp U-turn on Thursday as oil prices plunged after hitting a four-year high, UK gilt ​yields dropped after the Bank of England held interest rates and a jump in the yen prompted speculation about foreign exchange intervention.

The S&P 500 and the ​Nasdaq opened higher ‌on Thursday as investors drew comfort ​from strong earnings, ​even as fears about ⁠an escalation ​in the Middle East ​conflict deepened.

The S&P 500 rose 25.8 points, ​or 0.36%, at ​the open to 7,161.75, ‌while ⁠the Nasdaq Composite rose 186.7 points, or 0.76%, to ​24,859.941. The ​Dow ⁠Jones Industrial Average fell 98.9 ​points, or ​0.20%, ⁠at the open to 48,762.93.

Global bonds took a beating ​on Thursday after the oil spike ​and a hawkish Fed fuelled a ⁠selloff in Treasuries. Markets were quick to price out any rate cuts from the Fed this year and there is a roughly even chance of a hike by next spring. U.S. Treasury yields rose to a one-month high ​and the dollar gained broadly, topping 160 yen.