The Pakistan Stock Exchange (PSX) extended its losses for a second consecutive session on Tuesday, with the benchmark KSE-100 Index closing sharply lower. The market was rattled by a confluence of domestic and international headwinds, including fresh US tariff measures, escalating geopolitical risks, and domestic policy uncertainty.
Market Performance and Volatility
The KSE-100 Index settled at 166,258.54 points, down 1,432.54 points or 0.85%. The session was marked by high volatility, with the index hitting an intraday high of 169,237.51 before plunging to a low of 163,907.59—a swing of over 5,300 points. A late-session rebound, attributed to value hunting, helped pare some of the steepest losses following Monday’s dramatic 3.16% plunge.
Analysts Point to a “Catalyst” of External Pressures
Analysts identified multiple external factors driving the bearish sentiment. “US trade tariff uncertainty, geopolitical crises and uncertainty over the outcome of IMF third review talks played a catalyst role in bearish activity at PSX,” said Ahsan Mehanti, CEO of Arif Habib Commodities. He also cited a surge in government bond yields from a recent State Bank auction and concerns over inflation and weak corporate earnings.
Fresh US Tariffs Take Effect
The trading day coincided with the implementation of new US tariffs on imported goods. The measures, initially set at 10%, were enacted by President Donald Trump following a Supreme Court ruling that struck down previous broad duties. The new tariffs, framed as a response to US balance-of-payments deficits, are set to last 150 days unless extended by Congress, with Trump signaling a potential increase to 15%.
Escalating US-Iran Tensions Add to Caution
Further unsettling investors were heightened geopolitical tensions. President Trump stated he would decide within weeks whether to order strikes on Iran if no nuclear deal is reached, with reports indicating military options targeting Iran’s leadership were being considered. Indirect talks between the US and Iran are ongoing, but positions remain far apart. “Broader direction [is] contingent upon US-Iran talks,” noted independent analyst AAH Soomro.
Domestic Economic Data Provides Mixed Signals
Domestically, economic data offered a nuanced picture. Pakistan posted a current account surplus of $121 million for January, supported by strong remittances. However, the cumulative deficit for the first seven months of the fiscal year stood at $1.07 billion. Meanwhile, weekly inflation, as measured by the Sensitive Price Indicator (SPI), rose by 1.16%.
The market’s direction remains highly sensitive to developments in international trade policy, the geopolitical landscape, and upcoming reviews of Pakistan’s economic program with the International Monetary Fund.
