PSX slides 2,541 points as oil dents interest

ME tensions, faltering diplomacy trigger broad- based selling

KARACHI:

Pakistan Stock Exchange (PSX) began the week on a sharply negative note on Monday as escalating Middle East tensions and concerns over oil supply triggered a broad-based sell-off, wiping out more than 2,500 points from the benchmark KSE-100 index by the close.

The plunge came as crude prices surged, raising fears about the impact of higher energy costs on oil-dependent economies and corporate profits. The KSE-100 fell 2,541.20 points, or 1.49%, to settle at 167,970.66. It remained under pressure throughout the session, hitting the intra-day low of 167,441.64. The day's high was 170,437.73.

Middle East diplomacy appeared to have faltered at the weekend, with the postponement of a meeting between Iran and other Gulf nations. Meanwhile, attacks around the region's two key oil transit routes deepened concerns over the security of global energy supply, which weakened the investor risk appetite.

According to Ahmed Sheraz of KTrade Securities, the KSE-100 index closed down by 2,541 points, or 1.49%, as selling pressure remained dominant throughout the session. The decline was broad-based, where commercial banking, cement, fertiliser and oil & gas sectors contributed negatively. UBL, Fauji Fertiliser, Lucky Cement and Oil & Gas Development Company were among the major laggards.

Market sentiment remained under pressure as international oil prices continued to surge. Brent crude traded close to $109 a barrel, while delay in negotiations involving Iran, Gulf states and the US further weighed on sentiment. "High oil costs remain a key risk to Pakistan's external account, inflation outlook and market confidence," he said.

However, a potential breather emerged after the market's close as the State Bank kept its policy rate unchanged. The decision caused some stability amid ongoing external uncertainty and could support selective interest in cement, steel and other cyclical stocks.

"Going forward, the index is likely to stay volatile and sensitive to oil prices, with a sustained decline in crude or meaningful progress in regional negotiations needed to support a strong market recovery," Sheraz wrote.

Ali Najib of Arif Habib Limited (AHL) said investors were cautious amid the escalating US-Iran conflict, attacks on shipping traffic through the Strait of Hormuz and oil prices above $100/barrel, stoking concerns over fuel costs, inflation and the import bill. Investors were also awaiting the State Bank's rate decision, though most expected the policy rate to be left unchanged at 11.50%.

On the corporate front, Pakistan Petroleum reported FY26 earnings per share of Rs36.21, up 7% year-on-year, and announced a final dividend of Rs6/share, taking FY26 dividend to Rs12/share. Najib predicted that market activity was likely to remain volatile, with selective profit-taking and stock-specific moves expected amid the ongoing result season.