PSX falls over 3,300 points as inflation, budget concerns hit sentiment

The Pakistan Stock Exchange (PSX) came under selling pressure on Monday, with the benchmark KSE-100 Index falling over 3,300 points as investors reacted to May inflation rising above 11%, while caution ahead of the federal budget and uncertainty over the Gulf situation further weighed on sentiment.

According to the PSX website, the market opened on a negative note, with the KSE-100 Index shedding more than 1,100 points in the early minutes of trade. Selling pressure intensified as the session progressed, dragging the index to 170,396.85, down by 3,565.96 point.

Selling was observed in commercial banks, automobile assemblers, cement, exchange traded funds, property, oil and gas exploration companies, oil marketing companies and power generation sectors.

Market analysts said selling pressure was driven by investors’ cautious stance ahead of the June 5 federal budget, while uncertainty over US-Iran talks also weighed on sentiment, as market participants monitored the government’s efforts to balance IMF demands with some relief measures, including a possible tax cut for salaried individuals earning Rs150,000 to Rs200,000.

According to data released by the Pakistan Bureau of Statistics (PBS), Consumer Price Index-based inflation accelerated to 11.7% year-on-year in May 2026, up from 10.9% in April and 3.5% in May 2025, as higher food, fuel, and transport costs continued to push up consumer prices.

By close, the index settled at 170,600.20, down by 3362.61 points or 1.93% from the previous close.

Today’s decline came after a strong recovery in the previous week, when PSX gained on easing geopolitical tensions in the Middle East and improved domestic economic indicators. During the holiday-shortened trading week, the KSE-100 Index rose 4%, adding 6,119 points on a week-on-week basis to close at 173,963 points.

Global stocks traded at record highs on Monday as ​the AI boom continued to drive demand, offsetting news of fresh attacks in the Gulf that challenged optimism about a reopening of the ‌Strait of Hormuz and lifted oil prices.

While negotiators from Washington and Tehran are apparently working to hammer out a deal, U.S. President Donald Trump had been silent on their progress until posting that everyone should "just sit back and relax".

Brent crude ​futures rose nearly 3% to $94 a barrel, which in turn prompted a selloff in government bonds, which have been hurt ⁠by growing expectations for interest rates to rise to combat any spikes in inflation.

The MSCI All-World index was up 0.13% to trade around record highs, as ​markets from Tokyo to Seoul traded at or near all-time peaks, underpinned by avid demand for anything AI-related.

European stocks were down marginally on the day, as gains in energy shares were offset by losses in airlines and defence shares.

S&P 500 futures were up 0.3%, while Nasdaq futures firmed 0.5% after the benchmark indexes hit records last week.