The Pakistan Stock Exchange opened the week sharply lower on Monday as escalating tensions between the United States and Iran sent shockwaves through global equity markets, prompting widespread panic selling. The PSX’s benchmark KSE-100 Index settled at 151,972.99 points, down 16,089.17 points or 9.57 percent from the previous close of 168,062.16, marking the largest single-day drop in its history.
During the session, the index touched an intraday high of 159,328.59 (down 7.23%) and a low of 151,747.96 (down 9.71%). Trading began with a plunge of over 15,000 points, triggering a temporary one-hour trading halt under the exchange’s risk management rules. The market reopened at 10:27am, but investor sentiment remained cautious as geopolitical developments continued to dominate trading dynamics.
Mohammed Sohail, CEO of Topline Securities, noted that panic selling was exacerbated by leveraged positions and the market’s sensitivity to Iran and Afghanistan-related geopolitical risks. Independent analyst AAH Soomro described the market reaction as “panic mode” and advised investors to monitor crude oil movements, suggesting stabilization could occur if oil prices remained below $80 per barrel.
The escalation in military action by the United States and Israel in Iran, including missile attacks and regional reprisals, has heightened economic risks for Pakistan despite no direct involvement. Topline highlighted the potential for higher energy prices, imported inflation, and weaker investor confidence due to geopolitical instability. In response to the conflict, the UAE and Kuwait temporarily closed their stock markets, while European indices such as the EUROSTOXX 50 and DAX futures fell 1.4 percent and 1.3 percent, respectively. US futures for the S&P 500 and Nasdaq declined 0.6 percent.
Oil markets experienced significant volatility, with Brent crude briefly spiking almost 14 percent and West Texas Intermediate rising nearly 12 percent following the attacks. The closure and targeting of the Strait of Hormuz, a key passage for about 20 percent of global seaborne oil, further fueled supply concerns. Topline Research noted that crude prices rose 6–7 percent during Monday’s session and had climbed roughly 15 percent over the past seven trading sessions.
The spike in oil prices has direct implications for Pakistan’s inflation and external account. Analysts estimate that a 10 percent increase in crude costs could add $1.5–1.6 billion to the country’s import bill and raise inflation projections by 40–50 basis points. Other oil-related imports, including edible oil, coal, and rubber products, may also be impacted, potentially placing additional pressure on the Pakistani rupee despite the State Bank of Pakistan’s comfortable foreign exchange reserves.
Valuation metrics suggest the KSE-100 now trades at below 6.5 times FY2027 price-to-earnings ratios, compared to a historical average of 6.9 times, offering potential entry points for selective investors if market volatility stabilizes. The index has declined roughly 19 percent from its recent peak of 189,000 on January 23, 2026, and analysts caution that further swings are likely as geopolitical tensions continue to unfold and involve multiple nations.
Overall, Monday’s session underscored the sensitivity of Pakistan’s equity market to global geopolitical risks and energy price volatility, highlighting the challenges for investors navigating an increasingly uncertain environment.
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