Selling pressure continued at the Pakistan Stock Exchange (PSX) on Monday as investors remained cautious ahead of the State Bank of Pakistan’s (SBP) monetary policy announcement. Expectations of an increase in the benchmark interest rate, combined with geopolitical tensions in the Middle East and uncertainty surrounding international energy supplies, weighed on market sentiment. The benchmark KSE-100 Index opened in negative territory, losing more than 1,000 points during early trading before touching an intraday low of 161,250.06 points. By 12:45 pm, the index stood at 161,744.83 points, down 630.01 points, or 0.39%, from its previous close of 162,374.84 points, according to Pakistan Stock Exchange data.
Selling was visible across several major sectors, reflecting broad investor caution rather than pressure confined to a single industry. Automobile assemblers, cement manufacturers, commercial banks, oil and gas exploration companies, oil marketing companies, power generation firms and refineries all faced selling activity. Market participants were reassessing investment positions before the SBP’s Monetary Policy Committee meeting scheduled for Monday, with the anticipated policy announcement emerging as a key factor influencing short-term trading decisions. Changes in interest rates can affect borrowing costs, corporate financing, consumer demand and the attractiveness of equities compared with fixed-income investments, making monetary policy decisions particularly important for stock market valuations.
Analysts were expecting a 50-basis-point increase in the benchmark policy rate, citing concerns about persistent inflationary pressures and external economic shocks. A rate increase could influence the performance of different sectors in varying ways. Businesses that rely heavily on borrowing may face higher financing costs, while changes in interest rates can also affect banks’ earnings, investor portfolio allocations and expectations for future economic activity. With the monetary policy decision approaching, investors appeared reluctant to take significant positions before receiving greater clarity on the central bank’s assessment of inflation and economic conditions. The expected rate adjustment added to uncertainty already created by international commodity prices and regional security developments.
The latest decline followed five consecutive weeks of losses at the Pakistan Stock Exchange. During the previous week, the KSE-100 Index shed 4,044.84 points, equivalent to 2.4%, to close at 162,374.84 points. The weekly downturn reflected a combination of external and domestic concerns, including higher Brent crude prices, a widening trade deficit and continuing geopolitical tensions. These developments have increased uncertainty about Pakistan’s economic outlook, particularly because movements in international oil prices can affect the country’s import bill, inflation, transport expenses and energy costs. A sustained increase in imported energy prices could also complicate efforts to contain inflation and maintain external economic stability.
International markets were also trading cautiously on Monday as investors monitored oil prices, central bank meetings and corporate earnings announcements. Japan’s Nikkei index slipped 0.2% after losing 4% during the previous week, while South Korea’s main index declined 0.5%. South Korean shares had fallen almost 20% so far during October, highlighting the scale of pressure in that market. Meanwhile, MSCI’s broadest index of Asia-Pacific shares excluding Japan remained broadly unchanged. Chinese blue-chip shares fell 0.5% as the country’s ruling Communist Party began its fifth plenary session in Beijing. The Chinese market had recorded 11 consecutive weeks of declines amid concerns about domestic demand, despite continued strength in exports.
Oil prices eased on Monday after climbing towards six-month highs during the previous week. Hopes of reduced hostilities between the United States and Iran offered some relief to energy markets, although continued attacks affecting key producer Saudi Arabia kept supply concerns in focus. At 04:26 GMT, US West Texas Intermediate crude futures had declined by $2.23, or 2.16%, to $101.04 per barrel. Brent crude futures fell by $2.21, or 1.89%, to $114.51 per barrel. Despite the daily decline, prices remained elevated, leaving investors attentive to developments that could disrupt production or transportation across important energy routes.
For Pakistan’s equity market, the combination of monetary policy uncertainty, elevated international oil prices, external account pressures and regional tensions continued to shape trading activity. The KSE-100 Index’s recent losses have reflected concerns over the potential impact of these factors on inflation, corporate profitability and economic growth. Investors were awaiting the SBP’s policy announcement for further direction, while movements in global energy markets and developments in the Middle East remained important risks for market sentiment.
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