Pakistan-US trade agreement boosts stock market

Investor sentiment remained buoyant on Thursday as the bourse rallied on the back of a landmark trade agreement between Pakistan and the United States, alongside continued optimism over macroeconomic stability and policy continuity from the central bank.

“Positive sentiment on US trade deal is a diplomatic success, especially when people compare higher duties on Indian export,” said independent investment and economic analyst AAH Soomro.

“The hope is that US–Pakistan partnership continues strengthening, leading to economic stability under IMF,” he added.

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index closed at 139,390.42 points, up 978.17 points, or 0.71%, from the previous close of 138,412.25.

The index climbed to an intraday high of 139,977.65, gaining 1,565.40 points, or 1.13%, while touching a low of 139,369.06, up 956.81 points, or 0.69%.

In a major diplomatic breakthrough, US President Donald Trump confirmed the finalisation of a trade agreement between the two countries. The development signals a boost in bilateral economic ties at a time when India continues to face high tariffs and geopolitical headwinds due to its energy ties with Russia.

According to the Ministry of Finance, the agreement was concluded during Finance Minister Muhammad Aurangzeb’s meeting with the US Secretary of Commerce and the US Trade Representative. Pakistan’s Ambassador to the US Rizwan Saeed Sheikh and Commerce Secretary Jawad Paul were also present.

A statement from the ministry said the purpose of the deal is to enhance bilateral trade, improve market access, attract investment, and strengthen cooperation in energy, minerals, IT, and emerging sectors such as cryptocurrency.

The agreement includes tariff reductions on Pakistani exports to the US and aims to encourage US investment in Pakistan’s infrastructure and development projects, marking a fresh phase in economic cooperation between the two countries.

Meanwhile, the State Bank of Pakistan (SBP) held its key policy rate unchanged at 11% during Wednesday’s Monetary Policy Committee meeting, citing persistent inflation risks and pressures on the trade balance.

In its post-meeting statement, the SBP said inflation projections had slightly worsened due to unexpectedly high gas tariff adjustments, but noted that price pressures are expected to stabilise within the target range moving forward.

SBP Governor Jameel Ahmad, in a subsequent press conference, said inflation would likely remain between 5% and 7% during FY26, though temporary breaches above the upper band were possible in some months. He added that the trade deficit was expected to widen as economic activity picked up.

On Wednesday, the KSE-100 Index gained 447.43 points, or 0.32%, to close at 138,412.25, up from 137,964.82 in the previous session. The index touched a high of 139,018.88 and a low of 137,658.81 during the session.