Escalating US-Iran conflict sparks broad-based selling, while energy supply concerns weigh on market sentiment
KARACHI: Pakistan’s stock market came under intense selling pressure on Monday, with the benchmark KSE-100 Index plunging 4,662 points during intraday trading as escalating tensions in the Middle East triggered widespread investor panic and heightened concerns over global energy supplies.
As of 12:00 PM Pakistan Standard Time (PST), the KSE-100 Index was trading at 175,264.83 points, down 4,662 points, or 2.59%, from the previous close, as investors rushed to reduce exposure to equities amid mounting geopolitical uncertainty.
The sharp decline followed renewed hostilities between the United States and Iran, which reignited fears of broader regional instability and potential disruptions to global oil supplies.
Investor sentiment weakened further after U.S. President Donald Trump announced the reinstatement of a blockade on Iranian vessels transiting the Strait of Hormuz, one of the world’s busiest oil shipping lanes. The blockade is scheduled to take effect at 4:00 p.m. Eastern Time, raising fresh concerns about the security of global energy trade.
Trump also said that cargo vessels passing through the strategic waterway would be subject to payment requirements, calling for a 20% reimbursement from countries benefiting from U.S. efforts to secure the route, including Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Kuwait.
The latest measures came amid renewed military tensions between Washington and Tehran, with the United States seeking to tighten restrictions on Iran’s maritime operations while Iran reportedly responded by targeting U.S. allies in the region.
Adding to market uncertainty, Trump said he would support proposed legislation aimed at imposing tougher sanctions on buyers of Russian oil and natural gas, raising concerns that further restrictions on global energy supplies could fuel higher oil prices and inflationary pressures worldwide.
The escalating geopolitical tensions prompted investors to shift towards safer assets, triggering broad-based selling across major sectors of the Pakistan Stock Exchange. Analysts said higher international oil prices could increase Pakistan’s import bill, widen the current account deficit, and put additional pressure on inflation, factors that weighed heavily on market sentiment.
Market participants are expected to closely monitor developments in the Middle East, as any further escalation or diplomatic breakthrough is likely to determine the near-term direction of both global financial markets and the Pakistan Stock Exchange.