The outcome of stalled US-Iran talks to end the conflict will determine the direction of Pakistan's stock market next week, analysts said. They warned investors may stay cautious ahead of the upcoming federal budget. The Pakistan Stock Exchange (PSX) ended last week sharply lower on geopolitical tensions.
What will drive the PSX next week?
The PSX outlook for the coming week hinges on US-Iran negotiations, international oil prices, and the upcoming federal budget. Analysts expect the KSE-100 to stay cautious until the talks gain clarity. Any easing of Strait of Hormuz tensions could revive investor sentiment and serve as a supportive trigger for equities.
The benchmark KSE-100 index shed 5,520 points last week, closing at 165,596. Investor confidence weakened sharply on the back of escalating geopolitical risk.
How did the KSE-100 perform last week?
The KSE-100 carved out a strong bearish trend last week amid geopolitical tensions. The benchmark lost 5,520 points to close at 165,596, signaling notably weakened investor confidence.
Several positive developments still emerged. Pakistan issued its inaugural 3-year Panda Bond in China worth $250 million at a 2.5% coupon rate.
Workers' remittances rose 11% to $3.5 billion in April 2026. That compares with $3.2 billion in the same month a year earlier.
Why are analysts expecting market caution?
Pakistan's market outperformed the MSCI FM Index by 4.1% in FY26. The country's weight in the MSCI FM Standard Index is expected to be around 5.8% after the latest review, effective May 29.
An Arif Habib analyst said KSE-100 performance next week will depend on geopolitical developments. Investor activity may stay cautious until the upcoming budget policies gain clarity.
Spectrum Securities said the market is likely to remain cautious owing to concerns over the US-Iran agreement. Uncertainty around how long the two sides will take to reach a deal is weighing on sentiment.
Global equity markets, international oil prices, and trade dynamics remain highly sensitive to the direction of the talks. These factors will shape market sentiment in the coming sessions.
What are the key catalysts for the PSX?
AKD Securities said US-Iran negotiations and the trajectory of international oil prices remain the pivotal near-term catalysts. Any easing of Strait of Hormuz tensions would serve as a key supportive trigger.
The recent IMF disbursement of $1.3 billion under the EFF and RSF programs has reinforced Pakistan's external financing outlook. The Panda Bond debut adds to that improvement.
InterMarket Securities said market direction will remain highly event-driven. Investor focus will center on developments in US-Iran negotiations.
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