PSX extends slide as Iran-Israel conflict clouds outlook

• KSE-100 Index closes at 120,465.93, down 1,505.11 points, or -1.23%.
• The index touched an intraday low of 120,417.99, shedding 1,505.11 points, or -1.23%.
• Index climbed to a high of 121,905.49, still down 65.55 points, or -0.05%.

The capital market extended its decline on Wednesday as investors remained cautious amid regional tensions and economic uncertainty.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 120,465.93, down 1,505.11 points, or -1.23%, from the previous close of 121,971.04. 

During the session, the index touched a low of 120,417.99, reflecting a drop of 1,553.03 points, or -1.27%, and climbed to an intraday high of 121,905.49, falling 65.55 points, or -0.05%.

“The market is likely to remain choppy for couple of weeks until clarity is noticed on regional tensions between Iran and Israel and its possible repercussion on Pakistan's geopolitical alignment,” said independent investment and economic analyst AAH Soomro. 

“Also further uptick in oil prices to 80s or beyond and impact on Strait of Hormuz will materially adversely impact Pakistan's economic and inflation outlook,” he added.

Oil prices climbed 2% on Tuesday after US President Donald Trump abruptly left G7 talks to monitor the conflict and urged residents of Tehran to evacuate. 

Since Friday’s initial surge oil prices fluctuated between gains and losses. However, gains were tempered after the International Energy Agency said in its 2025 report that global demand would fall slightly in 2030 for the first time since the start of the Covid pandemic in 2020.

On Monday, the State Bank of Pakistan (SBP) kept its key interest rate unchanged at 11%, citing heightened inflation risks driven by geopolitical instability. 

In its post-MPC statement, the central bank warned that the Iran-Israel conflict could weigh on Pakistan’s external sector and inflation outlook. While imports are rising in line with recovering domestic demand, exports have slowed under global trade pressure.

The broader conflict continues to escalate. Despite international calls for restraint, both Israel and Iran have maintained missile strikes since Friday, when Israel targeted Iranian nuclear and military infrastructure.

On Tuesday, the KSE-100 Index had closed down 254.32 points, or -0.21%, at 121,971.04. The index recorded a high of 122,891.61 and a low of 121,815.39 during the session.