The Pakistan Stock Exchange’s (PSX) main index fell by than 6,400 points on Tuesday. This big drop happened because of fighting between the United States and Iran.
The KSE-100 index started low. Had lost 3,464.89 points by 10am. It went down to 176,462.15 points from the close of 179,927.04. During the day the market went up and down a bit. Then it dropped sharply after 2:30pm. Finally the index closed at 173,518.81 points. This was down 6,408.23 points or 3.56 per cent from the close.
The drop happened because global oil prices went up to their highest in four weeks on Tuesday. The US put its blockade on Iran back in place. The two countries also increased attacks in the Strait of Hormuz. This made people unsure about energy supplies.
Brent crude futures went up $2.89 or 3.47pc to $86.19 per barrel at 5pm PKT. US West Texas Intermediate crude rose $1.53 or 1.96pc to $79.67 a barrel. Oil prices are now at their highest since the two countries agreed to end the war on June 18.
Topline Securities Ltd said the big sell-off happened because of increased tensions between the US and Iran. They said investors got nervous after reports that the US put its blockade back in place and conducted airstrikes. Iran responded by targeting oil tankers in the Strait of Hormuz.
The brokerage house said this made people worried about stability. They were also concerned about disruptions to oil supplies. This made investors avoid risk and sell stocks at the PSX.
United Bank Limited (UBL) Engro Holdings, Fauji Fertiliser Company, Lucky Cement and Meezan Bank contributed the most to the index drop. They collectively reduced the benchmark index by 2,057 points.
Awais Ashraf, director of research at AKD Securities also said the market crash happened because of the US reinstating its blockade on Iran.
He said the drop was across the board. Cyclical sectors had the percentage losses. This was because of increased uncertainty about the medium-term outlook due to the emerging situation.
The PSX was under pressure on Monday. Equity investors got nervous about developments in the Strait of Hormuz. This dragged the KSE-100 index below 180,000 points.
The benchmark KSE-100 index remained under pressure, throughout the session. It touched an intraday low of 2,793 points before closing at 179,927. This was down 2,314 points or 1.27pc.
The decline was also because of based profit-taking. This happened after the market’s rally. Investors chose to lock in gains despite a macroeconomic backdrop.
Global Stock Markets Show Mixed Performance
US stock futures were mixed on Tuesday. This happened after Trump said the US would blockade the navy. Investors were also going through the earnings reports of Wall Street banks.
S&P 500 futures went down by 0.1 percent in European trading. Nasdaq futures were up by 0.5 percent.
European shares started lower. This was because of rising tensions between the US and Iran. Investors were checking the earnings of companies like BP and Ericsson. They wanted to see how the conflict would affect these companies.
The STOXX 600 index, which tracks shares went down by 0.4 percent. The travel and leisure sector was down, by 2 percent.
Following a trading session in Asia the MSCIs main world shares index went into the negative as European markets started trading.
Chinese shares jumped up earlier in the day after the export and import data for June came out on Tuesday and was better than what economists thought. The Chinese shares ended up 2.15% higher.
Korean shares went up 0.7%.. Stocks in Taiwan dropped 1.42% that day.
“Chinas exports and imports are at their highest since 2021 and the tech boom is helping growth on both sides ” ING analysts said in a note.
The night Wall Street stocks fell. The S&P 500 closed 0.8% lower. The Nasdaq Composite fell 1.6%. S&P 500 futures went down 0.1% in European trading but Nasdaq futures went up 0.3%.
The US dollar index, which shows how strong the dollar is compared to currencies went down 0.1% to 101.16 and is trading around its highest level this month.
Gold went up 0.5%, to $4,020.34.
In Tokyo the Nikkei 225 closed up 0.7% after Finance Minister Satsuki Katayama said Japan might change the strategy of its big Government Pension Investment Fund if things changed a lot. Didn’t give more details.
