PSX dips 3,500 points on peace uncertainty

The Pakistan Stock Exchange (PSX) experienced cautious and largely range-bound trading throughout the week as prolonged uncertainty surrounding peace talks between the United States and Iran kept investor sentiment subdued.

At the commencement of the trading week, "peace deal uncertainty triggered profit-taking", remarked Ali Najib, Deputy Head of Trading at Arif Habib Ltd (AHL).

The market ended Monday's session on a highly weak note, when the KSE-100 index shed 3,363 points (-1.93%) to close at 170,600. On Tuesday, there was a mixed session, which closed at 171,022, up 422 points (+0.25%). The bourse once again lost ground on Wednesday amid mixed sentiment, settling at 170,191, down 831 points (-0.49%). On Thursday, peace hopes lifted investor confidence as the PSX notched up gains of 985 points (+0.58%) and ended trading at 171,176. However, the market witnessed a range-bound session on Friday, where the index dipped 697 points, or 0.41%, and settled at 170,479.

"The KSE-100 delivered a flat performance for the week as talks between the US and Iran showed no tangible progress," AHL noted. The index settled at 170,479, down 2% week-on-week (-3,484 points).

Among economic indicators, the Consumer Price Index (CPI) came in at 11.7% for May 2026, the highest since June 2024, compared to 10.9% in April 2026. Fertiliser offtake showed a decline of 3% year-on-year in May, totaling 463k tons. On a cumulative basis, the 5MCY26 urea sales rose 8% YoY to 1,908k tons. Meanwhile, di-ammonium phosphate (DAP) offtake fell 38% YoY to 59k tons, likely due to higher prices.

Overall refinery sales dropped 7% YoY in May owing to decrease in high-speed diesel (HSD) and furnace oil offtake. HSD deliveries fell 19.1% to 409k tons, while motor spirit (MS) supplies remained relatively resilient, improving 4.3% to 247k tons. Oil marketing companies' (OMC) sales for May recorded a 23% YoY and 14% month-on-month decline, driven by higher MS and HSD prices. On a cumulative basis, 11MFY26 OMC sales stood at 14.93 million tons, up just 1% YoY, AHL said.

Syed Danyal Hussain of JS Global noted that the KSE-100 index declined 2% WoW (-3,483 points) as investor sentiment remained subdued amid escalating tensions and continued military clashes between the United States and Iran. Meanwhile, Brent crude oil prices rose 4% WoW to $95 per barrel.

On the macroeconomic front, Pakistan's monthly trade deficit narrowed 14% YoY to $2.6 billion, primarily due to a 7% decline in imports. However, the cumulative deficit widened 17.5% to $34.8 billion during 11MFY26 as imports increased 5.9%.

Inflationary pressures continued to build, with CPI inflation accelerating to 11.7% in May, the highest level recorded in the past 23 months. Fiscal challenges also persisted as the FBR's tax collection remained below target, resulting in a cumulative shortfall of Rs868 billion during 11MFY26. Total collection stood at Rs11.2 trillion against the downward-revised target of Rs12.09 trillion. Separately, the federal budget announcement was postponed to June 10 amid ongoing discussions with the IMF regarding revenue measures, development spending and fiscal targets, Hussain added.