Stocks tumble at PSX, KSE-100 down 6,400 points amid US-Iran tensions

Heavy selling gripped the Pakistan Stock Exchange (PSX) on Wednesday after the United States launched fresh military strikes against Iran, tightened sanctions on Iranian crude exports, and declared the interim understanding with Tehran effectively over.

Investor sentiment weakened further after US President Donald Trump stated that the memorandum of understanding aimed at ending the conflict with Iran was “over” and indicated he had no intention of resuming engagement with Tehran.

By 2:00pm, the benchmark KSE-100 Index had fallen to 179,792.17, losing 6,463.38 points, or 3.47%, as broad-based selling swept across the market.

The decline was led by major sectors including automobile assemblers, cement, commercial banks, fertiliser, oil marketing companies (OMCs), and power generation. Heavyweight stocks such as HUBCO, MARI, OGDC, PSO, SSGC, SNGPL, and WAFI remained under significant selling pressure.

The sharp decline followed Tuesday’s weaker session, when the benchmark index slipped 1,199.14 points, or 0.64%, to close at 186,255.55 after investors booked profits near record-high levels. Despite the correction, optimism over the upcoming corporate earnings season had continued to provide some support to market sentiment.

Global markets also reacted to rising geopolitical risks after the US carried out another round of strikes on Iranian targets and revoked a temporary licence that had allowed Iran to export crude oil. The move came after three oil tankers were reportedly struck by projectiles in the Strait of Hormuz, raising concerns over regional stability and energy supplies.

Oil prices extended their gains, with US crude rising nearly 3% in early trading, while the US dollar strengthened against most major currencies amid increased demand for safe-haven assets.

Meanwhile, traders raised expectations that the US Federal Reserve could increase interest rates in September, with market-implied odds climbing to more than 67%, according to CME FedWatch data.

Investors are also awaiting the release of minutes from the Federal Open Market Committee’s June meeting for further insight into the US central bank’s policy outlook under Fed Chair Kevin Warsh.

Separately, a report from the New York Federal Reserve showed that US consumers became more concerned about short-term inflation in June, adding to uncertainty over the future path of monetary policy.