Pakistan stocks decline as government to terminate power producers’ contracts

Pakistan stocks corrected on Thursday as investors chose to book profits after Prime Minister Shehbaz Sharif’s announcement of premature termination of power purchase pacts with five producers to reduce cost of electricity.

Two Independent Power Producers (IPPs) — Hubco and Lalpir Power — published material information that shifted market sentiment, as both IPPs will terminate their contracts early. Hubco declined 0.69% to close at PKR 112.5, while Lalpir Power declined 0.6% to PKR 15.7 per share.

Additionally, Hubco announced that, pursuant to the terms of the agreement, the government and the Central Power Purchasing Agency-Guarantee (CPPAG) have agreed to settle the company’s outstanding receivables up to October 1, 2024.

The presence of Saudi delegation in Islamabad, along with statements regarding the Reko Diq project, sparked interest in Pakistan Petroleum and Oil & Gas Development Company.

The KSE-100 index shed 0.25% or 216.06 points to close at 85,453.22 points.

Separately, Indian stocks ended higher on Thursday despite some volatility. The market started strong but couldn't maintain gains as European markets faltered, anticipating key US inflation data and rising global bond yields.

Domestic market momentum was mixed with caution due to subdued expectations for results of the current fiscal year's second quarter amid weak global and rural demand.

India’s BSE 100 Index lost 0.04% or 9.39 points to close at 26,514.04 points.

Meanwhile, the Dubai Financial Market (DFM) General Index gained 0.34% or 15.23 points to close at 4,437.56 points.

Commodities

Oil prices climbed over 1% on Thursday, driven by increased fuel demand as a major storm hit Florida and concerns over Middle East supply risks.

Earlier this month, prices surged after Iran launched over 180 missiles at Israel on October 1, sparking fears of retaliation against Iranian oil facilities.

However, with Israel yet to respond, crude benchmarks have stabilized and remained relatively flat throughout the week.

Brent crude prices fell 0.38% to $76.89 per barrel.

Meanwhile, the yellow metal got an uplift from the general slide in global interest rates and a string of Federal Reserve (Fed) officials striking a neutral or dovish tone at their speaking engagements.

Gold rebounded overnight after the Reserve Bank of New Zealand (RBNZ) became the latest major central bank to slash interest rates.

Lower interest rates are bullish for gold because they reduce the opportunity cost of holding a non-interest-paying asset.

International gold prices increased 0.23% reaching $2,614.63 per ounce. In Pakistan, gold prices declined by PKR 500 to PKR 271,200/tola on Thursday.

Currency

US dollar remained steady against PKR, up 0.02% in the inter-bank market. Pakistani currency settled at 277.79, a loss of seven paisas against the US dollar. In the open market, USD was trading at PKR 280.