PSX rebounds as easing US-Iran tensions lift investor sentiment

Bulls staged a strong comeback to the Pakistan Stock Exchange (PSX) on Tuesday as investors rushed back into equities after signs of a possible pause in escalating tensions between the United States and Iran improved market sentiment following a sharp sell-off a day earlier.

According to the PSX website, the market opened on a positive note, with the benchmark KSE-100 Index surging over 2,400 points, or 1.5%, in early trade to touch 164,309.64 before paring some gains later in the session, though it remained firmly in positive territory.

Market experts attributed the recovery to a combination of geopolitical and economic developments, including the government’s announcement regarding the tokenisation of sovereign bonds through blockchain technology.

Buying interest was observed in commercial banks, oil and gas exploration companies, oil marketing companies, power generation and automobile assemblers, cement sector.  Index-heavy shares, including ARL, HUBCO, MARI, OGDC, PPL, POL, MEBL and UBL traded in positive territory during the session.

At close, the KSE-100 settled at 162,896.68, up 1091.66 points or 0.67% from the previous close.

The rebound followed heavy losses on Monday when investor sentiment weakened amid concerns over escalating tensions in the Middle East, lack of progress in United States-Iran negotiations and rising international oil prices. The KSE-100 Index had closed the previous session at 161,805.02 points after losing 3,791.05 points, or 2.29%.

Global stock and bond markets steadied on Tuesday after U.S. President Donald Trump paused a planned ​attack on Iran and said there was a good chance of a nuclear deal, sending oil prices lower.

Trump said on Monday ‌he had halted a planned resumption of attacks against Iran to allow time for negotiations to take place on a deal to end the war, after Tehran sent a new peace proposal to Washington.

He subsequently said there was a "very good chance" the U.S. could reach an agreement with Iran to prevent Tehran from obtaining a nuclear weapon.

Investors remained ​cautious, after being rattled in the previous session by a weekend drone strike in the United Arab Emirates.

European stocks rose 0.7% in early ​trading, further recovering ground lost on Friday when they dropped 1.5% as bond market jitters spread to equities.

Futures for ⁠the U.S. S&P 500 were little changed after the index flatlined on Monday following a 1.2% drop on Friday.

MSCI's broadest index of Asia-Pacific shares outside Japan was down more than 1%, while Japan's Nikkei eased 0.4%.

Brent crude futures fell 1.4% to $110.50 a barrel on the back of Trump's comments, while U.S. crude was flat at $108.70 per barrel. Both remained ​more than 50% above their pre-war levels.