The Pakistan Stock Exchange (PSX) suffered a sharp reversal on Friday as the KSE-100 Index recorded a decline of 2,475 points after news broke that planned US-Iran talks in Switzerland would not take place. The benchmark index, which had opened on a bullish note, surrendered all early gains as aggressive selling gripped the market through most of the session.
Strong Open Followed by Steep Selloff
The KSE-100 Index opened in positive territory and climbed to an intraday high of 182,185.87 points in early trade, buoyed by optimism that had carried over from Thursday’s session. However, the positive momentum proved short-lived as selling pressure emerged before noon and intensified sharply.
The index plunged to an intraday low of 177,836.16 points, a swing of more than 4,300 points between the day’s high and low. A partial recovery followed in the second half of the session, but renewed selling in the final hour trimmed those gains. The benchmark index eventually settled at 178,922.75 points — down 2,475.46 points, or 1.36%, at close.
US-Iran Talks Collapse Triggers Selloff
The trigger for the KSE-100 decline was geopolitical. US Vice President JD Vance pulled out of a planned trip to Switzerland to meet Iranian negotiators, abandoning what was expected to be the start of complex talks on implementing the 14-point agreement struck between Washington and Tehran to end their war.
A White House spokesperson confirmed the cancellation. US officials had earlier indicated a formal signing ceremony for the US-Iran agreement would be held in Geneva, but Iran’s foreign ministry cast doubt on that, saying it was unnecessary after both countries’ presidents signed the agreement on Wednesday. The uncertainty around next steps rattled investor sentiment and triggered the broad-based KSE-100 decline seen on Friday.
Thursday’s Rally Now Fully Reversed
Friday’s loss wiped out gains accumulated over the prior session. On Thursday, the PSX extended its bullish momentum as declining international crude oil prices and growing optimism surrounding the US-Iran peace agreement strengthened investor confidence, triggering broad-based buying across key sectors. The KSE-100 had gained 887.20 points, or 0.49%, to close at 181,398.22 points that day.
Friday’s KSE-100 decline of 2,475 points erased those gains entirely and pushed the index well below Thursday’s close, leaving sentiment fragile heading into the weekend.
Global Markets Tell a Different Story
While the PSX struggled, international equity markets largely celebrated the geopolitical developments of the week. Shares climbed to record highs in Japan and South Korea as peace in the Middle East, combined with the reopening of the Strait of Hormuz, pulled oil prices sharply lower and eased inflation fears globally.
Japan’s Nikkei gained 0.8% to hit a new record for the fifth consecutive session, extending its weekly gain to 8.5%. South Korea’s market surged 3.1%, adding to a weekly rise of 15.3%. Mainland China, Hong Kong, and Taiwan markets were closed for the Dragon Boat Festival holiday.
Oil tankers resumed passage through the Strait of Hormuz after the United States lifted its blockade on Iran on Thursday as an interim deal took effect. Brent crude futures fell 1% on Friday to $79.03 a barrel, and posted a weekly decline of 9.5%.
Dollar Surges on Hawkish Fed Signals
The US dollar hovered near a 13-month high against major peers after a hawkish pivot from the Federal Reserve led markets to price in more than one rate hike this year. The move dragged the Japanese yen to its weakest level in two years and intensified speculation that Japanese authorities may need to intervene to arrest the currency’s slide.
The dollar’s strength added another layer of complexity for emerging market investors, including those active on the PSX, as a stronger greenback typically weighs on capital flows into developing economies.