PSX plummets, oil prices soar as Middle East tensions intensify

WEB DESK: The Pakistan Stock Exchange (PSX) has fell sharply on Friday morning, dropping two limits early in trading day. From above 124,000 points, the index has fallen below 122,000 points.

On the last day of the trading week, the benchmark KSE-100 index witnessed a sharp bearish trend, with a recorded decline of 2,488 points at the opening of trade, bringing the index to 121,604 points.

Since then, the market seems to have stablised the losses, but is still trading 2227.74 points below opening at  121,865.38 points, after opening above 124,000 points.

PSX saw a huge boom yesterday, after which the index reached its highest level in history at 126,000, however, the index closed at 124,092 at the end of trade.

GLOBAL MARKETS TUMBLE

Global stock markets have also dived on Friday and oil prices surged after Israel conducted a military strike on Iran, rattling investors and sparking a shift towards safe havens such as gold and the Swiss franc.

The escalation in hostilities in the Middle East – a major oil-producing region – adds a fresh layer of uncertainty for financial markets at a time of heightened pressure on the global economy from US President Donald Trump’s aggressive and erratic trade policies.

OIL SOARS

Market reaction was swift. Crude oil jumped as much as 14 per cent at one point, with Brent futures up by $5.43 at $74.79 per barrel, and WTI futures up by $5.55 at $73.59 per barrel. Gold climbed as high as $3,444.06 per ounce, bringing it close to the record high of $3,500.05 from April.

“The geopolitical escalation adds another layer of uncertainty to already fragile sentiment,” said Charu Chanana, chief investment strategist at Saxo, adding that crude oil and safe-haven assets will remain on an upward trajectory if tensions continue to intensify.

Global stock markets had been poised for a fall following an almost unbroken rally since early April that took the MSCI All-Country World index to an all-time high this week, according to Jessica Amir, a strategist at MooMoo. “There’s room for fat to be taken off the table,” she said.

“It just appears that this is the catalyst that will probably send equities down lower.”

Israel said its “preemptive strike” targeted Iranian nuclear facilities, ballistic missile factories and military commanders to prevent Tehran from building an atomic weapon.

Iran had launched about 100 drones towards Israeli territory in retaliation, which Israel is working to intercept, an Israeli military spokesman said.

Also read: Stocks tumble, oil soars as Israel’s strike on Iran roils investors