Pakistan Stock Exchange plunges over 6,000 points as US-Iran conflict escalation rattles investors

Pakistan's stock market suffered one of its sharpest single-day declines in recent months on Tuesday as escalating military tensions between the United States and Iran in West Asia triggered widespread panic selling and dampened investor sentiment.

The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) plunged by more than 6,000 points during intraday trade, wiping out billions of rupees in investor wealth as traders rushed to reduce exposure amid fears of a prolonged regional conflict.

The market breached six major psychological levels in a single session, falling from around 179,000 points to below 174,000 points as selling intensified across sectors.

The KSE-100 index opened in negative territory and was already down 3,464.89 points by 10 am, slipping to 176,462.15 from the previous close of 179,927.04. Selling pressure deepened through the session, with the benchmark eventually tumbling 6,088.03 points, or 3.38 per cent, to 173,839.01.

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Heavy selling was seen in shares of commercial banks, fertiliser companies, cement makers, energy firms and oil and gas companies, reflecting concerns over the impact of higher oil prices and geopolitical uncertainty on Pakistan's economy.

Around 900 million shares worth 45.50 billion Pakistani rupees changed hands during Tuesday's trading session, highlighting the surge in market activity as investors exited positions.

The sell-off followed a fresh escalation in the military confrontation between the US and Iran, which has heightened concerns over disruptions to global energy supplies and increased the risk of a broader regional conflict.

Pakistan is particularly vulnerable to spikes in crude oil prices because it relies heavily on energy imports. Sustained increases in oil prices could widen the country's trade deficit, fuel inflation and put additional pressure on its foreign exchange reserves and currency.

Markets around the world have remained on edge as investors monitor developments in West Asia, with crude oil prices gaining on concerns that supply routes, including the strategically important Strait of Hormuz, could be disrupted if the conflict intensifies.

The latest decline also marked a sharp reversal for Pakistani equities, which had posted strong gains in recent months. Analysts said while domestic fundamentals had improved, external shocks such as geopolitical conflicts remain a key risk for emerging markets.

With inputs from agencies.