PSX sinks as US-Iran escalation fuels investor anxiety

Investor confidence evaporated on Monday as escalating conflict between Iran and the United States caused a steep surge in global oil prices, triggering selling pressure.

“Markets are stressed due to the ongoing conflict between Iran and Israel. This has caused oil to spike more than 25% from its lows, creating inflationary fears," said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.

"This is leading to people readjusting to the risk in the market,” he added.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 116,167.47, down 3,855.76 points, or -3.21%, from the previous close of 120,023.23.

During the session, the index climbed to an intraday high of 118,798.51, falling 1,224.72 points, or 1.02%, and touched a low of 117,977.81, reflecting a deeper drop of 2,045.42 points, or 1.19%.

Oil prices surged and Asian markets traded lower on Monday following US air strikes on Iranian nuclear facilities, raising concerns about disruption to global energy flows.

The US bombed multiple nuclear sites on Sunday, with President Donald Trump calling the operation "a spectacular military success." The B-2 Spirit stealth bombers were used to strike key Iranian facilities at Fordow, Natanz, and Isfahan.

Iran, the ninth-largest oil producer globally with output around 3.3 million barrels per day, exports just under half of that amount. Analysts warn that if Tehran retaliates, it could move to close the Strait of Hormuz — a strategic waterway that carries one-fifth of global oil shipments.

Iranian parliamentarians reportedly backed the measure, and the country’s Supreme National Security Council is expected to make a final decision on whether to proceed.

On Friday, the KSE-100 Index had edged up by 20.65 points, or 0.02%, to close at 120,023.24. The day’s high and low were recorded at 120,828.86 and 119,872.16, respectively.