PSX under pressure as oil spike, rate hike hit sentiment

Stocks at the bourse came under pressure on Thursday as an oil-price spike triggered by fears of a prolonged US blockade of Iranian ports rattled global sentiment, with investors also weighing the fallout from the latest interest-rate hike and the risk of higher domestic inflation.

The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index traded between a high of 164,357.47 (down 1,466.4 points, or 0.88%) and a low of 161,461.09 (down 4,362.78 points, or 2.63%) against the previous close of 165,823.87.

"Market came under pressure following international markets where crude oil also rose after Trump warned the Iran blockade could last 'months'. This created fresh concerns on domestic inflation," said Huzaifa Riaz, Director, Mayari Securities (Pvt) Limited.

Oil jumped after US President Donald Trump warned the US blockade of Iranian ports could last months, while reports said he would be briefed on potential fresh military action. 

The Wall Street Journal reported Trump had told national security officials to prepare for a prolonged blockade to pressure Tehran, while Axios cited unnamed sources as saying Admiral Brad Cooper, commander of US Central Command (Centcom), would brief the president on possible military options. 

The prospect of the Strait of Hormuz remaining effectively shut, a route through which around a fifth of global oil and gas normally passes, pushed crude to its highest level since 2022. Brent for June delivery surged 7.1% to $126.41 a barrel in Asian trade, while West Texas Intermediate (WTI) rose 3.4% to $110.31, with both later paring gains.

"The interest rate hike was expected to derate the valuation of the overall index. Since then, continuously rising oil prices and the US preparation to endure months-long naval blockade are bad for global economies."

"Hence, Pakistan's stock market is taking a breather where investors assess risks versus rewards of staying invested," said AAH Soomro, an independent investment and economic analyst.

Global equities softened, with most Asian markets lower, while investors also weighed the outlook for US monetary policy after dissent at the US Federal Reserve's latest vote. 

Markets had been supported in recent weeks by a revival of the artificial intelligence trade, with strong earnings from major technology firms and a sharp jump in operating profit at Samsung Electronics adding to that theme.

In the previous session on Wednesday, the KSE-100 Index fell 2,588.35 points (1.54%) to close at 165,823.87 from 168,412.23, after trading between an intraday high of 169,686.03 and a low of 165,391.47.