The Pakistan Stock Exchange reversed its early gains on Monday as uncertainty surrounding a potential US-Iran peace agreement and the reopening of the Strait of Hormuz weighed on investor sentiment. The benchmark KSE-100 Index initially moved sharply higher during the opening minutes of trading, gaining more than 700 points to reach an intraday high of 182,347.50. However, the positive momentum failed to hold as selling pressure emerged later in the session, pushing the index into negative territory and resulting in a weaker close.
According to data available on the Pakistan Stock Exchange website, the KSE-100 Index settled at 181,310.28 points, down 119.74 points from the previous close. The reversal came after the index had maintained a positive trajectory during the initial part of the trading session. Selling pressure became more pronounced after 12:00 pm, with the benchmark index losing more than 500 points at one stage. The decline was broad-based, with selling activity reported across automobile assemblers, cement companies, commercial banks, oil and gas exploration companies and power generation companies.
The market had initially received support from positive domestic economic data, particularly the latest remittance figures released by the State Bank of Pakistan. Remittances sent by overseas Pakistanis increased 13% year-on-year to $3.631 billion in July 2026, while also rising 4.5% compared with the previous month. The stronger inflow data provided an initial positive signal for investors and contributed to the early gains in the equity market before geopolitical uncertainty once again became the dominant factor affecting trading sentiment.
The latest decline followed a strong performance by the Pakistan Stock Exchange during the previous week. The market had recovered significantly as diplomatic discussions involving Iran and Oman concerning shipping through the Strait of Hormuz helped reduce some geopolitical concerns. Expectations of a broader agreement between the United States and Iran also supported investor confidence. During the week ended Friday, the KSE-100 Index gained 5,335.89 points, or 3% week-on-week, closing at 181,430.02 points.
Brokerage firms had previously indicated that the equity market could continue building on its recent momentum, supported by improving economic indicators, easing geopolitical tensions and the ongoing corporate earnings season. However, analysts also highlighted risks linked to developments in the Middle East and domestic political conditions. The latest trading session reflected the sensitivity of the local equity market to developments surrounding the US-Iran situation and the future status of the Strait of Hormuz, particularly because changes in the shipping route can have implications for global energy markets.
International markets also remained focused on developments surrounding the potential reopening of the Strait of Hormuz. Global equities moved modestly higher on Monday after Iran said it was approaching a final agreement with Oman concerning new shipping lanes through the waterway. However, Iran also maintained that the Strait would only reopen once the United States met additional conditions. The uncertainty over the timing and terms of any agreement continued to influence investor expectations, while oil prices remained relatively stable following a sharp decline during the previous week.
European and US equity futures recorded modest gains during Monday’s trading. The continent-wide Stoxx 600 index increased 0.1%, while futures linked to the US S&P 500 gained 0.2% and Nasdaq futures rose 0.4%. Asian markets had also advanced overnight, following gains on Wall Street. Japan’s Nikkei increased 2.1%, while South Korea’s benchmark market gained 0.7%. The MSCI global equities index was up 0.1% on Monday.
Oil markets remained closely linked to developments surrounding the Strait of Hormuz. Brent crude futures stood at $83.74 per barrel, up 19 cents by 0807 GMT, while US West Texas Intermediate crude futures increased 3 cents to $78.21. Both benchmarks had declined by more than 7% during the previous week as expectations grew that Iran and Oman were close to reaching an agreement that could facilitate the reopening of the Strait.
The Strait of Hormuz remains important to global energy markets because it carried approximately one-fifth of the world’s oil and liquefied natural gas supplies before the Middle East conflict that began at the end of February. Any uncertainty surrounding the waterway therefore remains relevant to energy prices, international markets and investor sentiment. For Pakistan’s equity market, the developments could continue to influence sectors exposed to energy prices and broader geopolitical conditions, while investors also monitor domestic economic indicators and corporate earnings for further direction.