PSX Slides as Oil Surge and Rate Hike Concerns Weigh on Markets

The Pakistan Stock Exchange (PSX) came under considerable pressure on Friday as escalating international oil prices, driven by the ongoing US-Iran conflict, stoked fears of higher domestic fuel costs, mounting inflationary pressures, and a potential interest rate hike.

The benchmark index fell to an intra-day low of 166,141.17, shedding 2,723.87 points, or 1.61%, from the previous close of 168,865.04.

Although the KSE-100 index reached an intra-day high of 167,748.91 during the session, it still finished 1,116.13 points below the previous close of 168,865.04.

Ahfaz Mustafa, Chief Executive Officer of Ismail Iqbal Securities, said the market was grappling with pressure from rising international oil prices tied to the US-Iran conflict and the consequent increase in local petroleum prices.

“The rise in energy costs will push inflation higher, and market participants are pricing in a reasonable possibility of a rate hike at the next monetary policy decision,” he said.

Oil prices continued their upward trajectory on Friday, with both major benchmarks on track to close the week above $100 a barrel for the first time since mid-May.

Brent crude surged to a four-month high of $109.97 a barrel on Friday, following a 6% overnight jump, capping a weekly gain of nearly 13%.

The Houthis seized control of Yemen’s port of Mocha on Thursday, posing a further threat to Red Sea shipping, while Gulf traffic continues to face restrictions through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

Attacks targeting Saudi energy facilities marked a significant escalation beyond Iran and the Strait of Hormuz, raising fears of prolonged disruptions across the broader region, according to analysts.

— With input from Reuters

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