PSX Plunges Nearly 7% Amid Global Oil Shock

Pakistan’s equity market experienced significant selling pressure on Monday as a sharp rise in global oil prices triggered widespread investor concern, pushing the benchmark KSE-100 Index sharply lower despite a temporary trading halt.

The index dropped to 147,715.95 points within the opening minutes of trading, reflecting a decline of 9,780.15 points, or approximately 6.21 percent, compared with the previous closing level. Following the downturn, trading was temporarily suspended in accordance with the regulations of the Pakistan Stock Exchange after the KSE-30 Index declined by more than five percent from its prior closing level.

In a notice issued by the exchange, Trading Right Entitlement certificate holders were informed that a market halt had been triggered under PSX regulations due to the five percent drop in the KSE-30 Index, resulting in the suspension of all equity-based trading activities.

Trading resumed at approximately 10:30 am; however, the market continued to decline, with the benchmark index falling to an intraday low of 144,119.43 points, representing a loss of 13,376.67 points. By the close of the trading session, the index settled at 146,480.14, registering an overall decline of 11,015.96 points, or 6.77 percent, compared with the previous close.

Broad-based selling pressure was observed across major sectors including automobile assemblers, cement manufacturers, commercial banks, oil and gas exploration companies, oil marketing companies, power generation firms and refineries. Several index-heavy stocks, including those associated with MCB Bank Limited, Meezan Bank Limited, National Bank of Pakistan, Mari Petroleum Company Limited, Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pakistan State Oil, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company and Hub Power Company closed the session in negative territory.

Market participants attributed the sharp correction to the surge in global oil prices, its potential impact on domestic economic conditions and heightened geopolitical tensions in the Middle East. On Friday, the federal government announced an increase of Rs55 per litre in petrol and high-speed diesel prices, citing supply risks linked to disruptions around the Strait of Hormuz.

On Monday, Brent crude prices rose approximately 23 percent to reach $114.36 per barrel, marking one of the largest daily increases in recent decades and adding to the roughly 28 percent gain recorded during the previous week. Meanwhile, West Texas Intermediate crude climbed 27 percent to $115.11 per barrel, intensifying concerns regarding rising fuel costs and inflationary pressures worldwide.

Market analysts noted that the Pakistan Stock Exchange responded quickly to elevated risk levels, prompting investors to prioritise liquidity and capital preservation. They indicated that restoring market confidence would largely depend on a reduction in regional tensions, which currently show limited signs of easing.

Analysts also warned that sustained high oil prices could further strain Pakistan’s external account and potentially trigger another wave of inflation if global commodity prices remain elevated.

The latest market downturn follows significant losses recorded during the previous week, when the KSE-100 Index declined by 10,566.08 points, or approximately 6.3 percent, closing at 157,496.09 compared with 168,062.17 points a week earlier.

Global equity markets also faced pressure as oil prices surged amid concerns about supply disruptions linked to the Middle East conflict. Several Asian markets recorded notable declines as rising energy costs and geopolitical uncertainty prompted investors to shift toward safer assets.

Nikkei 225 in Japan dropped approximately 7.5 percent, extending losses from the prior week, while the market in South Korea fell about 8.1 percent. Meanwhile, China’s blue-chip CSI 300 Index declined by roughly 2.3 percent.

Analysts stated that continued geopolitical tensions in the Middle East and concerns regarding energy supply routes—particularly the Strait of Hormuz—are likely to keep global financial markets violate in the near term.