The Pakistan Stock Exchange (PSX) came under selling pressure on Monday as escalating tensions between the United States and Iran raised concerns about potential disruptions to oil supplies through the Strait of Hormuz. The benchmark KSE-100 Index closed 720.83 points, or 0.41%, lower at 176,975.67 points. The market initially showed signs of recovery during the morning session and moved towards the 178,000 level around noon, but selling pressure emerged after midday and continued through the afternoon, pushing the index towards an intraday low of 176,944.91 points.
The decline intensified towards the close as investors remained cautious amid concerns over developments in the Middle East and their potential impact on global oil supplies. Brokerage house Topline Securities said concerns about possible disruptions to oil shipments through the Strait of Hormuz pushed Brent crude above $90 per barrel and weighed on market sentiment. Higher oil prices and uncertainty surrounding the geopolitical situation added pressure to equities as investors assessed the possible implications for global markets and Pakistan’s economy.
Several major stocks contributed significantly to the KSE-100 Index decline. United Bank Limited (UBL), Systems Limited (SYS), Habib Bank Limited (HBL), Lucky Cement (LUCK) and Pakistan Petroleum Limited (PPL) were among the companies that exerted the strongest negative impact on the benchmark. According to Topline Securities, these five stocks cumulatively reduced the index by 755 points during Monday’s trading session, making them the leading contributors to the overall decline.
Despite Monday’s fall, the KSE-100 Index remained marginally higher for the month of August. Topline Securities said the benchmark gained 0.5% month-on-month during August, reflecting a market environment affected by a lack of fresh triggers and limited progress towards peace negotiations between the United States and Iran. The market had also remained range-bound during the previous week, when the KSE-100 Index gained 530 points, or 0.3%, to close at 177,696.52 points.
International market developments also contributed to the cautious environment. Asian share markets declined on Monday following renewed fighting between the United States and Iran, which pushed oil prices higher while keeping bond yields elevated. Brent futures increased 1.4% to $89.38 per barrel after United States forces struck two Iranian launchers on Larak Island on Sunday. The movement in oil prices added to concerns about energy supply disruptions and increased uncertainty across global financial markets.
Higher oil prices were accompanied by changes in expectations surrounding United States monetary policy. Markets raised the probability of a September interest rate increase to 57%, leading to a sharp rise in short-term Treasury yields and a flatter yield curve. Investors are expected to closely monitor upcoming United States economic data, particularly the August payrolls report due on Friday and consumer price data scheduled for September 11. Forecasts point to an increase of 58,000 jobs following a decline of 23,000 in July, while unemployment is expected to remain at 4.1%.
The combination of geopolitical uncertainty and higher yields also affected major Asian markets. Japan’s Nikkei index fell 2.1%, while South Korean stocks declined 2.4%. MSCI’s broadest index of Asia-Pacific shares outside Japan also dropped 0.7%. The movements reflected broader investor concerns as financial markets assessed the impact of the conflict, higher energy prices and changing expectations regarding United States interest rates.
In Pakistan’s currency market, the rupee recorded a marginal improvement against the United States dollar. The local currency appreciated 0.01% on Monday and closed at 277.47 per dollar, gaining Re0.03 against the greenback. The modest movement in the exchange rate came as the stock market faced significant selling pressure and investors monitored developments in international markets and their potential impact on domestic financial conditions.
Trading activity increased during Monday’s session. Volume on the all-share index rose to 937.27 million shares compared with 658.33 million shares in the previous session. The total value of traded shares also increased to Rs39.13 billion from Rs31.45 billion previously, indicating higher market activity despite the decline in the benchmark index.
Cnergyico PK emerged as the volume leader with 293.18 million shares traded, followed by Waves Home (R) with 71.23 million shares and Bank of Punjab with 52.29 million shares. A total of 503 companies traded during the session, with 169 recording gains, 302 posting declines and 32 remaining unchanged. The broader market therefore reflected a predominantly negative trading trend, with declining stocks significantly outnumbering advancing companies.
The performance of the KSE-100 Index on Monday reflected the sensitivity of Pakistan’s equity market to developments in global energy markets and geopolitical conditions. Concerns surrounding the Strait of Hormuz and higher crude oil prices remained key factors influencing investor sentiment, while movements in international bond yields and expectations regarding United States interest rates added to the uncertainty. With the KSE-100 ending August only 0.5% higher month-on-month, investors continue to monitor external developments alongside domestic market factors for fresh direction.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.