Market surges to historic peak after US tariff cut

The Pakistan Stock Exchange (PSX) surged to a record high on Friday following the United States' decision to lower import tariffs on Pakistani products, boosting investor sentiment and indicating a positive shift in bilateral trade relations.

The PSX's benchmark KSE-100 Index settled at 141,034.98 points, up 1644.56 points, or 1.18%, from the previous close of 139,390.42.

The index climbed to an intraday high of 141,160.93, gaining 1,770.51 points, while touching a low of 138,957.70, down 432.72 points.

Last night, revised tariffs were announced by the US government, wherein Pakistan will now face reciprocal tariffs of 19% compared to the earlier rate of 29%, reducing the impact by around 10%.

"We believe this deal will be neutral to Pakistan and will help [the] country remain competitive with direct competitors, albeit no significant advantage over peers," Topline Securities said in a note.

On Thursday, Pakistan hailed the US-Pakistan trade deal as a breakthrough that would enhance investment flows and strategic cooperation.

The deal follows months of negotiations that began in April. President Trump, in remarks made Wednesday, also stated that the United States would partner with Pakistan to explore the country’s “massive oil reserves".

Pakistan's largest refiner Cnergyico is set to import 1 million barrels of oil from Vitol in October, its vice chairman Usama Qureshi told Reuters on Friday, marking the country's first-ever purchase of US crude following the trade deal.

Meanwhile, another reasons for the market's rally was the State Bank of Pakistan (SBP) holding its key policy rate steady at 11% for a second consecutive meeting earlier this week, defying market expectations of another rate cut.

In its policy statement, the SBP cited elevated inflation risks due to higher-than-anticipated energy price adjustments, particularly in gas tariffs. However, it said inflation was still projected to stabilise within the target range going forward.