Pakistan stocks surge as central bank slashes rates; Indian & Dubai markets remain range-bound

Pakistan Stock exchange closed the week on a positive note after the central bank slashed the interest rate, which was above the market expectations.

Another positive development was much awaited board meeting announcement from the IMF, rekindling hopes of receiving loan from the lender.

State Bank of Pakistan (SBP) on Thursday slashed key policy rate by 200bps to 17.5% amid falling inflation and IMF announcement for its executive board likely approval of $7 billion new IMF loan program on September 25.

Governor SBP also apprised the government was prepared to secure the necessary external financing from lenders to meet the IMF's requirements. Strong rupee backed by surging FX reserves also lifted market sentiments.

The KSE-100 index gained 0.85% or 671.73 points to close at 79,286.74 points.

Indian stocks ended down on Friday, after hitting all-time highs in the previous session, ahead of a likely rate cut by the Federal Reserve. Gains for the week were driven by rise in consumer stocks on hopes of demand revival and volume growth due to a stable monsoon. IT companies, which earn a chunk of their revenue from the U.S., gained 2.8% ahead of a near-certain Fed rate cut next week.

India’s BSE 100 Index shed 0.11% or 29.53 points to close at 26,872.99 points.

The Dubai Financial Market (DFM) General Index gained 0.36% or 15.62 points to close at 4,380.49 points.

Commodities

Oil prices rose over 1% on Friday on the back of output disruption in the U.S. Gulf of Mexico after Hurricane Francine forced the evacuation of production platforms. Ongoing supply disruptions in Libya and larger than expected disruption in the Gulf of Mexico keep the oil market tight.

Brent crude prices surged 1.15% to $72.80 per barrel.

Gold posted moderate gains on Friday. The softer-than-expected US Producer Price Index (PPI) report released on Thursday provided further evidence that inflation was subsiding and lifted bets for a larger interest rate cut by the Federal Reserve (Fed) next week. This is reinforced by a fresh leg down in the US Treasury bond yields, which drags the US Dollar (USD) to over a one-week low and continues to act as a tailwind for the non-yielding yellow metal.

International gold prices gained 0.32% reaching $2,566.47 per ounce. In Pakistan, gold prices increased by PKR 2,500 to PKR 265,800/tola on Friday.

Currency

US dollar lost against PKR, down 0.1% in the inter-bank market. Pakistani currency settled at 278.16, a gain of 28 paisas against the US dollar. In the open market USD was trading at PKR 279.50.