Pakistan stocks see largest single-day decline due to political unrest

Pakistan stock market fell by 3.57% or 3,506 points on Tuesday, marking its largest single-day decline.

This drop was caused by political unrest from a march by the country's largest opposition party toward the capital.

Prior to this, the largest single-day decline had happened on December 26, 2023, when the benchmark KSE-100 index dropped by 2,534 points.

Mohammed Sohail, chief executive of Topline Securities, explained that the market fell due to concerns over the opposition's protest in Islamabad.

The political situation remains tense as the Pakistan Tehreek-e-Insaf's protest has led to a lockdown and internet disruptions in the capital.

At one point, the index was down by 5,639 points from its peak of 99,819 points. The market stayed volatile, fearing potential violence.

However, a notice from the State Bank of Pakistan (SBP) on removing the minimum deposit rate (MDR) for large depositors sparked a brief rally in the banking sector.

The PTI protest, initially set for November 24, was delayed as PTI leaders said they were in "no hurry" to reach the capital. Supporters from across the country faced arrests, baton charges, and tear gas to join the protest.

Separately, Indian stocks were quiet on Tuesday, losing momentum after a two-day rise. Analysts predict market volatility as November contracts expire and are watching the government's spending plans following the BJP's big win in Maharashtra.

With elections over, government spending is expected to increase, helped by a recovery in rural demand due to good monsoon conditions and more weddings. A modest recovery in corporate earnings in the second half of FY24 could also boost market sentiment.

BSE-100 index shed 0.05% or 13.12 points to close at 25,551.14 points.

The Dubai Financial Market (DFM) General Index gained 1.1% or 52.39 points to close at 4,820.71 points.

Commodities

Crude oil prices steadied on Tuesday after dropping 3%. Easing tensions in the Middle East helped calm supply worries. However, ongoing instability in the region and the Russia-Ukraine conflict continue to support energy prices.

Additionally, a stronger US dollar, influenced by new trade policy concerns, put pressure on oil demand.

Brent crude prices increased 0.96% to $73.71 per barrel.

Gold prices turned positive after early losses as investors await the Federal Reserve meeting minutes for clues on future interest rates.

Lower interest rates are good for gold because they make it more attractive as a safe investment compared to non-interest-bearing assets.

Gold prices also found support due to trade war concerns. Fears about the trade war helped boost gold prices, especially after Donald Trump announced a 10% tariff on all imports from China and a 25% tariff on goods from Canada and Mexico.

International gold prices increased 0.4% reaching $2,628.01 per ounce. In Pakistan, gold prices decreased by PKR 4,100 to PKR 274,300 per tola. In two days, gold has declined PKR 8,400 per tola.

Currency

The PKR remained steady against the US dollar in the interbank market, down 0.06%. Pakistani currency settled at 277.84 with a loss of nine paisas. In the open market, USD was trading at PKR 280.