Stocks bleed on US-Iran peace talks failure

KSE-100 index plunges 6,600 points; oil surge and geopolitical fears dent sentiment

KARACHI:

In a subdued trading environment, the Pakistan Stock Exchange (PSX) plunged on Monday as heavy selling dragged the benchmark KSE-100 index down by 6,600 points.

The market came under intense selling pressure after an Islamabad-brokered peace initiative for the United States and Iran unravelled. The breakdown in talks triggered a sharp surge in global oil prices, with crude benchmarks jumping over 7% to exceed $100 per barrel, following Trump's announcement of a blockade on maritime traffic to and from Iranian ports via the Strait of Hormuz.

Earlier in the day, the index dropped 4,567 points (-2.73%) to 162,624 by 10:29 am. During intra-day trading, the KSE-100 touched a high of 163,612 and low of 160,159, reflecting extreme volatility and heightened uncertainty. The benchmark ultimately nosedived 6,600.05 points, or 3.95%, to settle at 160,591.33 over broad-based selling.

KTrade Securities equity trader Ahmed Sheraz told The Express Tribune that the KSE-100 opened sharply lower, falling 5,353 points (-3.2%), as investors turned cautious amid "no deal" in Pakistan-brokered peace talks. The lack of immediate clarity about continuation of negotiations weighed on confidence. Meanwhile, the escalating uncertainty lifted global oil prices to $104 per barrel, adding further pressure on equities.

Market conditions are expected to remain volatile in the near term, driven by evolving geopolitical developments and elevated oil prices. However, the broader outlook remains constructive as both the US and Iran have signalled their intent to uphold the ceasefire. The next key catalyst would be the second phase of negotiations, with reports suggesting that Qatar and Switzerland had expressed willingness to host talks, Sheraz observed.

The benchmark KSE-100 index remained under pressure throughout the session, where stock selling intensified in the final hours of trading as investor sentiment turned negative amid geopolitical concerns, JS Global analyst Nawaz Ali commented. As a result, the index registered a sharp decline of 6,600 points, after plunging 7,032 points during the day.

Although valuations appear attractive at current levels, the prevailing uncertainty on the geopolitical front warrants caution. Ali advised investors to maintain a prudent stance, closely monitor ongoing developments and avoid aggressive positioning until clarity emerges.

Arif Habib Limited (AHL) wrote that in a fresh Monday slide, the KSE-100 index dropped 3.95%. Only five shares rose while 93 fell. Service Industries (+1.46%), TPL REIT Fund-I (+0.77%) and HBL Growth Fund (+0.99%) were the key contributors to the index gains and on the flip side Fauji Fertiliser (-4.36%), United Bank (-4.89%) and Engro Holdings (-5.09%) were the biggest index drags.

In major news, Fitch affirmed Pakistan's long-term foreign currency debt rating at 'B-'. This reflects progress on fiscal consolidation and macro stability measures, broadly in line with the IMF programme and supporting funding capacity.

Regional tensions persist with no breakthrough in Islamabad talks that triggered a "risk-off move", which saw the KSE-100 fall back into support at the 200-day moving average, AHL said. The overall trading volume decreased to 743.2 million shares against Friday's turnover of 875.5 million. The value of traded shares stood at Rs34.3 billion.

On the ready market, shares of 483 companies were traded. Of these, 66 rose, 377 dropped and 40 remained unchanged. WorldCall Telecom led the volume chart with trading in 176.6 million shares, gaining Rs0.05 to close at Rs1.47. Foreign investors bought shares worth Rs534.4 million.