PSX surges over 5,300 points as halt in US-Iran hostilities lifts market sentiment

Bulls returned to the Pakistan Stock Exchange (PSX) on Monday after days of heavy selling pressure, as a pause in US-Iran hostilities triggered a 4% decline in global crude prices and raised hopes for the reopening of the Strait of Hormuz.

According to the PSX website, the market opened on a bullish note, with the benchmark KSE-100 Index hovering at 176,339.32 points as of 10:20 am, up 5,318.12 points, or 3.11%, from the previous close.

Strong buying interest was seen across key sectors, including apparel, automobile assemblers, automobile parts and accessories, cable and electrical goods, cement, chemicals, commercial banks, food and personal care products, oil and gas exploration, oil marketing companies (OMCs), and power generation. 

Investor attention is now shifting to the State Bank of Pakistan's (SBP) monetary policy announcement, due later on Monday. Market participants widely expect the Monetary Policy Committee (MPC) to keep the policy rate unchanged, with brokerages saying the decision will remain the key focus for investors.

The rebound follows a difficult week for the PSX, as escalating tensions in the Middle East, particularly the Houthis' announcement of a blockade in the Red Sea, dampened investor confidence and pushed international Brent crude prices above $100 per barrel for the first time in nearly two months, triggering broad-based selling.

The KSE-100 Index had declined 2.7% week-on-week, shedding 4,781.60 points to close at 171,021.20 points.

A senior Iranian official told Reuters on Sunday that Iran will halt its own attacks as long as the United States does the same. The development came after the US paused its bombing campaign, with President Donald Trump's advisers telling him they were running out of targets and raising concerns about depleting the US arsenal.

Following 13 nights of intensifying US airstrikes on Iran, the Pentagon suspended the campaign late on Friday, with no US attacks reported on either Saturday or Sunday. Iran, which had responded to each night of US strikes with attacks on neighbouring countries hosting US bases, has also held fire for two days.

Asian equity markets also rallied in on Monday as a pause in fighting in the Gulf dragged oil prices lower, easing inflation ​risks and boosting bonds ahead of a packed week of central bank meetings and earnings reports.

Japan's Nikkei edged ‌up 0.2%, ⁠while South Korea's chip-heavy index firmed 0.2%. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5%.

In Europe, EUROSTOXX 50 futures gained 0.8%, while DAX futures rose 0.9% and FTSE futures added 0.2%.

Chinese blue chips gained 0.3% as chipmaker CXMT Corp surged 500% in its Shanghai trading debut after raising $8.6 billion in Asia's biggest initial public offering this year.

Brent crude futures fell $3.96, or 4.1%, to $92.82 by 0329 ​GMT after briefly slipping under the key support level of $90 earlier in the session. U.S. West ​Texas Intermediate crude was at $85.29 a barrel, down $4.02, or 4.5%.