PSX jumps 5% on US-Iran peace hopes

The Pakistan Stock Exchange (PSX) registered a strong rebound in the outgoing week as the KSE-100 index surged 5%, or 8,122 points, to close at 171,116, driven by optimism over a potential peace deal between the United States and Iran.

On a day-on-day basis, the PSX commenced the week on a positive note, with the KSE-100 index closing at 163,949, up 955 points (+0.59%). On Tuesday, the market posted modest gains of 793.53 points, or 0.48%, and settled at 164,742.47.

The bourse witnessed a strong rebound on Wednesday, closing at 171,705, up 6,962 points (+4.23%). On Thursday, the KSE-100 recorded an increase of 1,189.52 points, or 0.69%, and ended trading at 172,894.28. The index on Friday fell 1,778.46 points at 171,115.82.

Arif Habib Limited (AHL) noted that the KSE-100 recorded a sharp rebound during the outgoing week due to a potential peace deal between the US and Iran. As a result, the benchmark index rose to 171,116, marking a 5% week-on-week (WoW) increase (+8,122 points).

Among economic indicators, Pakistan's trade deficit hit $4.1 billion in Apr'26. Exports were $2.5 billion (+14% year-on-year, -6.3% month-on-month), while imports were recorded at $6.6 billion (+17.1% YoY, +28.4% MoM). The cumulative 10MFY26 deficit widened 20.3% to $32 billion. Sales of oil marketing companies (OMC) dropped 7% YoY to 1.36 million tons in Apr'26, mainly on the back of higher petrol and high-speed diesel (HSD) prices. On a cumulative basis, the 10MFY26 OMC sales were up 4%, settling at 13.76 million tons, AHL mentioned.

Refinery supplies grew 12.7% YoY in Apr'26, driven by strong offtake of HSD and furnace oil (FO), with HSD volumes increasing 11.3% YoY to 442k tons and FO volumes surging 26% YoY to 235k tons. Fertiliser offtake in the month exhibited an 85% YoY growth for urea to 463k tons, the second highest April level on record. Cumulatively, the 4MCY26 urea sales rose 11% YoY to 1.50 million tons. Cement dispatches for Apr'26 showed a 11% YoY rise to 3.89 million tons, compared to 3.49 million tons last year. Of these, local dispatches soared 20% YoY, while exports fell 18%. On a cumulative basis, cement dispatches for July-April posted a growth of 10% to 43.43 million tons.

Gas production depicted a 4.5% WoW rise to 3,079 million cubic feet per day primarily due to higher output from Uch and Qadirpur. Meanwhile, oil production rose 2.7% to 72,167 barrels per day. Large-scale manufacturing (LSM) output expanded 11% YoY in Mar'26, and declined 9.3% MoM. The 9MFY26 LSM index jumped 6.5%, AHL said.

Syed Danyal Hussain of JS Global noted that the KSE-100 surged 5% (8,122 points) during the week, supported by improving diplomatic signals following reports of a possible peace memorandum between the US and Iran. Nevertheless, regional tensions remained elevated, with Brent crude hovering around $100 per barrel. Inflation accelerated to a near two-year high of 10.9% YoY in Apr'26, primarily driven by the increase in fuel prices. Meanwhile, the trade deficit widened 4% YoY to $4 billion, despite a 14% increase in exports. On a cumulative basis, the trade deficit expanded 20% to $32 billion during 10MFY26. On the fiscal front, tax revenue collection fell short of the monthly target by Rs73 billion in Apr'26, taking the cumulative shortfall to Rs683 billion in 10MFY26, Hussain said.

In other developments, the IMF Executive Board met on May 8 and approved $1.2 billion in loan tranches for Pakistan. The finance minister had earlier expressed confidence that the loan would be approved, citing improving macroeconomic indicators despite prevailing Middle East tensions. Lastly, the State Bank's foreign exchange reserves rose $23 million to $15.8 billion.