PSX surges as US-Iran deal, oil slump lift sentiment

Key market drivers were “budget, oil and interest rate expectations”, says analyst
islamabad
The equity market surged on Monday as investors cheered a US-Iran breakthrough, tumbling oil prices and what analysts described as a growth-tilted federal budget, easing fears of renewed inflationary pressure and an interest-rate hike.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 177,039.82 points, up 4,639.92 points, or 2.69%, from the previous close of 172,399.90.
During the session, the index climbed to an intraday high of 177,176.72, gaining 4,776.82 points, or 2.77%, before retreating to a low of 175,085.79, reflecting an increase of 2,685.89 points, or 1.56%.
“A budget that has directionally changed from consolidation to growth, along with the solution to the Iran-US conflict, has buoyed sentiment,” said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.
“It has also tamed expectations of a rate hike and triggered buying across all sectors, especially construction,” he said, adding that the key market drivers were “budget, oil and interest rate expectations”.
Oil prices tumbled and global stocks rallied on Monday after the United States and Iran said they had reached a deal to end their war and reopen the Strait of Hormuz, sending relief through global markets.
The two sides confirmed an announcement from mediator Pakistan, with a signing ceremony set to take place in Switzerland on June 19, bringing an end to three months of conflict that had sent energy prices soaring and revived fears of another inflation spike.
Prime Minister Shehbaz Sharif said the United States and Iran would sign a memorandum of understanding in Switzerland on Friday, with Pakistan having served as a mediator. US President Donald Trump said the Strait of Hormuz would be opened “toll free” and that a US naval blockade of Iranian ports would also end.
“The Deal with the Islamic Republic of Iran is now complete,” Trump wrote on social media.
“Ships of the World, start your engines. Let the oil flow!” he added.
Iran’s Deputy Foreign Minister Kazem Gharibabadi said the deal put an “immediate end” to the war and that talks on a “final agreement” would be held within two months.
Crude prices fell as much as 5% on Monday, with West Texas Intermediate approaching $80 a barrel for the first time since the start of March. Brent was down more than 4% at around $83.60.
The sharp decline in oil prices soothed concerns that renewed inflationary pressure could push central banks towards fresh interest rate hikes. On the domestic front, analysts said the Pakistan Stock Exchange was supported by the federal budget for FY27, robust remittance inflows and easing geopolitical tensions.