Pakistan stock market soars as investors eye diplomatic breakthrough

The Pakistan Stock Exchange (PSX) staged a strong recovery Wednesday after four consecutive days of losses, surging 3.52% as investors responded to renewed optimism surrounding diplomatic efforts to ease regional tensions.

The market, which had declined 11.2% over the past four sessions, rebounded on hopes of a potential release of a $1 billion tranche from the International Monetary Fund (IMF) and expectations of circular debt payments.

The rally was particularly strong in oil and gas exploration stocks, buoyed by improving investor sentiment in the second half of trading.

"After a volatile start, the market gained momentum in the second half on renewed optimism, following the reopening of Pakistan’s airspace, a move seen as a positive signal toward easing regional tensions," said an analyst at Ismail Iqbal Securities.

Ahsan Mehanti of Arif Habib Corp noted that stocks sharply rebounded as investors anticipated de-escalation in Pakistan-India tensions following a U.S. appeal for an end to violence and IMF board approval of the $1 billion disbursement under the Extended Fund Facility (EFF), along with an additional $1.3 billion arrangement under the Resilience and Sustainability Facility (RSF).

"SBP policy easing and a surge in global crude oil prices played a catalyst role in the record bullish close at PSX," Mehanti added.

The benchmark index ended the session firmly in the green, reclaiming much of the ground lost in previous days, signaling improved investor confidence amid unfolding geopolitical and economic developments.

KSE-100 index gained 3.52% or 3,647.82 points to close at 107,174.64 points.

Currency

US dollar gained against PKR in the inter-bank market. Pakistani currency lost 19 paisas to close at 281.71. In the open market USD was trading at PKR 283.15.

Indian Stocks

Indian stock markets ended Friday's session on a turbulent note, as escalating geopolitical tensions between India and Pakistan dampened investor confidence. While certain sectors showed resilience, overall market indices closed in negative territory.

The real estate sector took the hardest hit, followed closely by private banking, which also faced selling pressure. Meanwhile, pockets of strength emerged in media, consumer durables, capital goods, and public sector banks, which recorded moderate gains.

BSE-100 index shed 0.81% or 203.82 points to close at 25,013.93 points.

DFM General Index shed 0.03% or 1.51 points to close at 5,312.55 points.

Crude Oil

Oil prices climbed on Friday in anticipation of upcoming trade negotiations between the United States and China. Former U.S. President Donald Trump suggested that there could be room to lower the 145% border tax on Chinese imports if talks progress favorably.

While Brent crude responded positively to the potential for new trade agreements, concerns persist on the supply side as OPEC+ countries aim to ramp up production.

Brent crude prices increased by 2.04% to $64.12 per barrel.

Gold Prices

Gold prices climbed on Friday, set for a weekly increase as a weaker dollar and ongoing geopolitical concerns provided support. Investor attention remained on the upcoming U.S.-China trade talks scheduled for the weekend.

Gold, often sought as a safe haven during periods of economic and political uncertainty, reached a record high of $3,500.05 per ounce last month, driven by central bank purchases, fears of a tariff war, and strong investment demand.

International gold prices increased 0.85% to close at $3,332.11 per ounce. In the local market, gold prices decreased PKR 1,800 to 350,900 per tola.