PSX Plunges Amid Escalating Middle East Tensions Following US-Iran Strikes

The Pakistan Stock Exchange (PSX) continued its downward trajectory on Thursday as fresh geopolitical tensions in the Middle East rattled investor confidence, triggered by new US military strikes on Iran.

The benchmark KSE-100 Index opened sharply lower, shedding over 1,500 points within minutes of trading. Intensified selling pushed the index down to an intraday low of 179,411.35, marking a steep decline of 2,218 points by approximately 11:30 am.

Although the index recovered slightly by midday, it remained down 758.30 points, or 0.42%, settling at 180,871.06 against the previous close.

Investor concerns were further fueled by the escalation in US-Iran tensions, diminishing prospects for de-escalation and casting uncertainty over the Strait of Hormuz—a critical maritime chokepoint responsible for roughly 20% of global oil shipments prior to the conflict.

Selling pressure was widespread across sectors, including automobile assemblers, cement, commercial banking, fertilizers, oil and gas exploration, marketing firms, and power generation companies.

This downturn follows a significant sell-off on Wednesday, when the KSE-100 Index plummeted 4,626.18 points, or 2.48%, to close at 181,629.37 amid fears of a broader regional war and increasing global energy costs.

Economically, the IMF revised its forecast for Pakistan’s growth, projecting 3.5% for FY2026-27, slightly below the government’s 4% target. Meanwhile, the country recorded a historic $41.6 billion in workers’ remittances for FY2025-26, reflecting an 8.6% year-on-year increase. June 2026 alone saw $3.5 billion in remittances, up 2.0% annually but declining 18.3% from the prior month.

Regional markets showed mixed performance as oil prices climbed due to renewed Gulf tensions, reigniting inflation concerns and pressuring global bond markets.

MSCI’s Asia-Pacific equity index reversed early gains, slipping 0.5% late in the session. Japan’s Nikkei gained 1.3%, breaking a three-day losing streak, while South Korea’s KOSPI dipped 1% after initial gains in major tech stocks fizzled out.

US Wall Street futures rose marginally by 0.2%, with European equities anticipated to open 1% higher.

Brent crude futures climbed 1% to $78.85 a barrel, reaching a nine-week high of $80 and marking a weekly gain of 9%.

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