By Ali Imran
ISLAMABAD: The equity market came under heavy pressure on Monday as escalating geopolitical tensions and surging oil prices triggered selling pressure.
“Markets are stressed due to the ongoing conflict between Iran and Israel. This has caused oil to spike more than 25% from its lows, creating inflationary fears,” said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.
“This is leading to people readjusting to the risk in the market,” he added.
Oil prices surged and Asian markets traded lower on Monday following US air strikes on Iranian nuclear facilities, raising concerns about disruption to global energy flows.
The United States bombed multiple nuclear sites on Sunday, with President Donald Trump calling the operation “a spectacular military success.” The B-2 Spirit stealth bombers were used to strike key Iranian facilities at Fordow, Natanz, and Isfahan.
Iran, the ninth-largest oil producer globally with output of around 3.3 million barrels per day, exports just under half of that amount. Analysts warn that if Tehran retaliates, it could move to close the Strait of Hormuz — a strategic waterway that carries one-fifth of global oil shipments.
Iranian parliamentarians reportedly backed the measure, and the country’s Supreme National Security Council is expected to make a final decision on whether to proceed. On Friday, the KSE-100 Index had edged up by 20.65 points, or 0.02%, to close at 120,023.24. The day’s high and low were recorded at 120,828.86 and 119,872.16, respectively.
Earlier, The Pakistan Stock Exchange (PSX) concluded a turbulent week on a bearish note, as geopolitical tensions — particularly in the Middle East — dampened investor confidence and triggered widespread profit-taking.
Despite a positive start following the State Bank of Pakistan’s (SBP) Monetary Policy Statement (MPS), which met expectations by keeping the policy rate unchanged at 11pc, the KSE-100 index closed the week down 2,120 points, or 1.7pc, at 120,023.
According to Arif Habib Ltd, the market sentiment quickly shifted to caution amid escalating regional conflict, overshadowing stable macroeconomic indicators and robust auction results. The SBP held a special 22-day Treasury Bill auction for the first time, raising Rs916bn against a target of Rs900bn. Additionally, Rs557bn was raised in a Pakistan Investment Bond (PIB) auction, surpassing the Rs300bn target, with total participation of Rs1.2tr. Cut-off yields ranged between 11.39pc and 12.70pc, reflecting mixed investor expectations on interest rate trends.
The SBP reported a current account deficit of $103m for May, improving significantly from $235m in the same month last year. Foreign exchange reserves rose by $46m to $11.7bn, while the rupee depreciated by Rs0.74 week-on-week, settling at 283.70 against the US dollar.
