Key Points
- KSE-100 declines 1,309 points week-on-week
- Weekly percentage change: -0.86 per cent
- Average daily volumes fall 31 per cent to 604 million shares
- Global markets remain volatile amid geopolitical uncertainty
ISLAMABAD: The Pakistan Stock Exchange remained under pressure throughout the week as intensifying geopolitical tensions in the Middle East and consequent fluctuations in global crude oil prices dictated investor sentiment.
The benchmark KSE-100 index moved in a volatile trading range, with intermittent recovery attempts overshadowed by sustained selling pressure, ultimately closing lower for the week ending Friday last.
The index settled at 150,399 points, down 1,309 points week-on-week, reflecting a 0.86 percent decline.
Market participation also weakened, with average daily traded volumes falling 31 percent week-on-week to 604 million shares, signalling cautious positioning by both institutional and retail investors amid heightened global uncertainty.
Early week support from macro and diplomacy
Sentiment initially found support from Pakistan-led diplomatic engagement aimed at easing regional tensions.
Positive macroeconomic signals also contributed to early gains, including inflation data showing CPI at 7.3 per cent year-on-year in March 2026.
The announcement of a US$1.2 billion Staff Level Agreement with the International Monetary Fund further reinforced expectations of external financing stability.
Geopolitical volatility
As the week progressed, sentiment reversed sharply as geopolitical uncertainty deepened with US President Donald Trump’s fresh threatening statements.
Conflicting signals from the United States and corresponding reactions from Iran regarding the evolving Middle East situation heightened risk aversion across regional markets.
Concerns over possible escalation, combined with uncertainty around energy supply routes, led to increased volatility and profit-taking in equities in Pakistan and elsewhere.
Mixed macroeconomic indicators
Domestic economic indicators presented a mixed picture. GDP growth projection improved to 3.9 per cent year-on-year in 2QFY26, compared to 3.6 per cent in the previous quarter, reflecting gradual recovery momentum.
However, the trade deficit widened by 4 per cent year-on-year to US$2.7 billion, highlighting persistent external account pressures.
Meanwhile, foreign exchange reserves held by the State Bank of Pakistan increased marginally by US$6 million to US$16.4 billion as of March 27, 2026.
Regional and international markets
Global equity markets also traded with heightened volatility during the week under review.
In the United States, benchmark indices moved within a narrow range as investors balanced inflation expectations with safe-haven demand triggered by Middle East tensions.
European markets remained under pressure due to energy security concerns and fluctuations in crude oil prices.
Asian markets showed mixed performance, with early gains in export-oriented equities fading later as global risk sentiment deteriorated.
Commodity markets, particularly crude oil, experienced sharp swings driven by shifting geopolitical developments and fears of supply disruption.
Mediation diplomacy builds investor confidence
Pakistan’s extensive diplomatic efforts for mediation between Iran and the US are drawing support and attention from around the globe. Only last week, Pakistan hosted a quadrilateral talks on a peaceful resolution to the Middle East conflict.
Foreign Ministers from Turkey, Egypt and Saudi Arabia participated in the Pakistan-hosted two-day talks. Following this key meeting, Pakistan’s Foreign Minister visited China and came up with a Chinese-backed five-point peace formula.
These diplomatic engagements and mediation efforts, duly recognised by Iran and the US, have also gained investor attention. Direct investment decisions may take time, but short-term investments in the stock maket mostly prompted by such encouraging development.
Outlook
Market direction is expected to remain closely tied to developments in the Middle East conflict and movements in global oil prices.
Analysts suggest that any further escalation could sustain volatility, while signs of de-escalation may restore investor confidence.
Attention will also remain on upcoming corporate earnings, which are likely to shape short-term sentiment during the ongoing results season.
Despite recent pressure, valuations remain relatively attractive, with forward price-to-earnings multiples hovering near 6.4 times, leaving room for medium-term recovery if macroeconomic stability persists.
