Pakistan stocks fall as large scale manufacturing contracts

Pakistan stocks fell on Thursday, driven by a lack of positive triggers and uncertainty surrounding the new U.S. government strategy and its impact.

The market closed lower amid a weak economic outlook and concerns over dismal data, showing a 1.3% contraction in large-scale manufacturing (LSM) for July to November.

Expectations of a cautious policy rate cut by the State Bank of Pakistan (SBP) this month, rupee instability, and ongoing political noise also played a significant role in the bearish activity.

Major contributors to the negative movement included Fauji Fertilizer Company (FFC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Mari Petroleum Company Limited (MARI), and Millat Tractors Limited (MTL), collectively accounting for a loss of 392 points.

The benchmark KSE-100 index shed 658.96 points or 0.58% to close at 113,836.74 points.

Separately, Indian stocks rose on Thursday due to positive global cues, including optimism about an end to the war in Gaza. There was significant buying in the PSU bank and financial service sectors.

Experts noted that U.S. macro indicators suggest the "Trump trade" has peaked as Donald Trump's inauguration nears, with declines in US bond yields and the dollar index. Lower-than-expected US CPI inflation has fueled hopes for more Federal Reserve rate cuts this year.

The BSE-100 index gained 150.85 points or 0.62% to close at 24,536.75 points.

The Dubai Financial Market (DFM) General Index shed 0.29% or 15.03 points to close at 5,235.83 points.

Commodities

Oil prices remained steady, with only slight changes, despite a larger-than-expected drop in U.S. crude inventories and new broader sanctions against Moscow by Washington.

Data revealed a decrease in U.S. crude inventories by two million barrels for the week ending January 10, surpassing the expected 1.1 million barrel decrease.

Brent crude prices decreased 0.48% to $81.64 per barrel.

Gold prices rose — nearing one-month highs — after a softer-than-expected U.S. inflation report increased the likelihood of two Federal Reserve rate cuts this year, with the first expected in June.

International gold prices surged 0.65% reaching $2,711.87 per ounce.

Currency

US dollar remained steady against PKR in the inter-bank market. Pakistani currency settled at 278.85, a loss of 8 paisas against the US dollar. In the open market, USD was trading at PKR 280.50.