Market Downturn: PSX Loses Ground Amid Geopolitical Concerns

The Pakistan Stock Exchange (PSX) experienced a selling spree as the KSE-100 Index plummeted by over 1,200 points during Wednesday’s trading session.

Initially, the KSE-100 showed some upward movement, reaching an intra-day peak of 118,811.24. However, selling pressure emerged later in the day, dragging the index to an intra-day low of 117,120.39.

At the close of trading, the KSE-100 settled at 117,226.15, reflecting a significant decrease of 1,204.21 points, which translates to a 1.02% decline.

Market Sentiment

According to Topline Securities, the shift in market sentiment can be largely attributed to heightened regional geopolitical tensions. This prompted investors to exercise caution and secure their recent profits.

The brokerage house noted that the index’s downward trend was primarily driven by negative contributions from prominent stocks such as UBL, HUBC, HMB, MARI, and ENGROH. These stocks collectively contributed to a 526-point reduction in the index.

On the preceding day, Tuesday, the benchmark index had remained relatively unchanged after a period of range-bound trading.

IMF Revises Pakistan’s GDP Growth Forecast

The International Monetary Fund (IMF) has adjusted its GDP growth projection for Pakistan downward by 0.4%, setting it at 2.6% for the fiscal year 2025, compared to the earlier projection of 3% made in January 2025.

In its recent report, titled “World Economic Outlook (WEO) a critical juncture amid policy shifts”, the IMF forecasts a GDP growth of 2.6% for Pakistan in 2025 and 3.6% in 2026.

Previously, the IMF’s January 2025 WEO had estimated Pakistan’s GDP growth rate at 3% for fiscal year 2025 and 4% for 2026.

Fitch Ratings Forecasts Currency Devaluation

Simultaneously, Fitch Ratings has projected a gradual devaluation of Pakistan’s currency to mitigate potential pressure on the current account as economic activity in the nation increases.

Bloomberg reported that Fitch anticipates the rupee to depreciate to 285 against the dollar by the end of June and further weaken to 295 by the conclusion of the next fiscal year in 2026, according to Krisjanis Krustins, Director of Asia Pacific Sovereign Ratings at Fitch.

Global Market Overview

Globally, stock markets in Asia experienced a recovery on Wednesday following President Donald Trump’s statement that he had no intention of dismissing the Federal Reserve chairman, along with hints of reduced tariffs for China.

The dollar strengthened broadly after Trump retracted his threats to remove Fed Chair Jerome Powell, which had significantly undermined investor confidence in U.S. assets.

Trump also reiterated his desire to reach a deal with China involving tariffs significantly below 145%, while asserting that he would dictate the terms of any agreement if Beijing declined to negotiate.

Earlier on Tuesday, Treasury Secretary Scott Bessent reportedly expressed his belief in a de-escalation of U.S.-China trade tensions, although negotiations with Beijing had not commenced and were expected to be protracted.

According to Chris Weston, head of research at broker Pepperstone, market sentiment is noticeably changing, with a partial reversal of the previous day’s “sell America” trend.

Weston added that markets are increasingly accustomed to the President’s tendency to make abrupt statements and subsequently reverse course as if the matter were inconsequential.

In response, investors repurchased oversold stocks, leading to a 2.3% surge in Japan’s Nikkei and a 1.2% increase in South Korea’s main index during early trading.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3%.

Wall Street extended its overnight gains, with S&P 500 futures rising by 1.8% and Nasdaq futures by 2.0%. Market sentiment was bolstered by positive earnings reports, and Tesla shares rebounded by 5% after hours, despite falling short of forecasts.

Pakistani Rupee Slightly Weakens

Meanwhile, the Pakistani rupee experienced a slight decline against the US dollar, depreciating by 0.07% in the inter-bank market on Wednesday. The local currency closed at 280.97 against the greenback, down by Re0.20 from the previous day’s closing value.

Trading volume on the all-share index decreased to 605.17 million from 740.87 million recorded in the previous session.

The value of traded shares declined to Rs27.76 billion from Rs30.52 billion in the previous session.

B.O.Punjab led the volume charts with 58.49 million shares, followed by WorldCall Telecom with 33.01 million shares, and Power Cement with 29.59 million shares.

Out of the 457 companies whose shares were traded on Wednesday, 127 experienced an increase in value, 276 recorded a decrease, and 54 remained unchanged.