KARACHI: The Pakistan Stock Exchange (PSX) staged a strong recovery on Wednesday, with the benchmark KSE-100 Index surging more than 2,400 points during intraday trading as hopes of a potential US-Iran peace agreement and declining global oil prices boosted investor confidence.
The KSE-100 Index climbed to an intraday high of 179,536.15, gaining 2,452.93 points from the previous close of 177,083.22. The index also touched an intraday low of 178,631.90, remaining 1,548.68 points above Tuesday’s closing level.
What drove the PSX rally?
Market participants attributed the sharp gains to renewed optimism over diplomatic efforts to reopen the Strait of Hormuz, easing concerns over regional tensions and energy supplies.
Independent investment and economic analyst AAH Soomro said investors welcomed renewed prospects of a peace agreement as regional efforts to restore maritime traffic through the Strait of Hormuz gathered momentum.
He said the market’s short-term outlook would largely depend on the resumption of shipping through the strategic waterway and progress toward a lasting peace agreement in the region.
Soomro added that lower global oil prices, declining long-term bond yields, Pakistan’s recent S&P sovereign credit rating upgrade, and the ongoing corporate earnings season could support the market’s medium-term outlook and potentially push the KSE-100 Index beyond the 200,000-point mark before the end of the year.
How did global markets influence investor confidence?
Ismail Iqbal Securities Chief Executive Officer Ahfaz Mustafa said investor sentiment improved after US Treasury Secretary Scott Bessent indicated that a deal to reopen the Strait of Hormuz could be reached soon.
The remarks contributed to a sharp decline in international oil prices, easing inflationary concerns for oil-importing economies such as Pakistan.
Brent crude futures fell 92 cents, or about 1.2%, to $78.44 per barrel after losing more than 12% during the week. US West Texas Intermediate (WTI) crude also declined $1.07, or 1.4%, to $74.70 per barrel, extending weekly losses to more than 11%.
Oil prices have fallen amid growing expectations that diplomatic efforts led by regional mediators could help end the conflict between the United States and Iran and restore commercial shipping through the Strait of Hormuz, a key global energy transit route. The decline in crude prices, coupled with improving domestic economic indicators, strengthened buying interest across the Pakistan Stock Exchange.