ISLAMABAD: Pakistani stocks surged by nearly 7,000 points on Wednesday as investors reacted positively to hopes of a peace agreement between the US and Iran and a worldwide drop in oil prices following a de-escalation of tensions over the Strait of Hormuz passageway, a leading brokerage firm said.
The Pakistan Stock Exchange (PSX) closed at 171,704.75 points when trading ended on Wednesday, up by 6,962.28 points or 4.23 percent from the previous day’s close. The KSE-100 benchmark index surged to an intraday high of 7,346 points before the stock market closed at 171,704.75.
Optimism surged in the market after US President Donald Trump announced on Tuesday that Washington would temporarily pause an operation aimed at guiding stranded vessels through the Strait of Hormuz following a request from Pakistan and other countries. Trump said “great progress” had been made toward a peace agreement with Iran, but did not elaborate further.
“The market staged a sharp rally as sentiment turned decisively positive following President Donald Trump’s signal of progress on a potential Iran deal, easing tensions around the Strait of Hormuz,” Karachi-based brokerage firm Topline Securities said in a report.
Topline said the positive momentum further received an additional boost when Prime Minister Shehbaz Sharif appreciated Trump’s leadership in a statement on Wednesday.
“The endorsement further cemented investor confidence, adding fuel to the ongoing rally,” the firm noted.
Investors also rallied to oil prices dropping worldwide following the easing of tensions over the Strait of Hormuz, Topline said.
Brent crude futures, the global benchmark oil price, fell to below $102 a barrel following reports that the US and Iran were close to a peace agreement. The price was over $108 earlier on Wednesday.
“The drop in crude acted as a catalyst for cyclical plays, amplifying buying interest and sustaining the upward trajectory,” Topline said.
Pakistani investors have remained cautious in recent months due to regional tensions and energy price volatility brought about by the US and Israel’s war on Iran.
Iran’s subsequent attacks on Gulf countries in the region and tensions in the Strait of Hormuz, through which roughly 20 percent of the world’s oil and gas supplies pass through, have dented investors’ confidence.
