KARACHI: The Karachi Stock Exchange index climbs up by around 1,100 points, following the signing of an interim memorandum by both Tehran and Washington that calls for lifting of the naval blockade and Hormuz closure, despite President Donald Trump threatening to bomb again if Iran reneges on its promises.
The Pakistani stock market maintained its momentum due to positive sentiments arising from geopolitical developments. The KSE-100 Iran US peace deal rally helped boost the key index by more than 1,100 points during early trading on Thursday following the signing of a memorandum of understanding between the US and Iran.
The details of Iran-US peace accord
As stated by Pakistani Prime Minister Shehbaz Sharif, the signing of the US-Iran Memorandum of Understanding implies the immediate reopening of the Strait of Hormuz by Iran, as well as the lifting of the American blockade around Iranian ports. The details of the pact were revealed directly by PM Shehbaz on X.
Trump had no qualms about pouring cold water on any hopes raised by this deal and issued a warning about the likelihood of returning to war should Iran not adhere to the terms.
The presence of a general buying mood increases the KSE-100
The rally in the KSE-100 after the US-Iran peace agreement was a broad-based move, with buying in automotive assembly companies, cement companies, commercial banks, oil and gas exploration companies, oil marketing companies, and power generation sectors – all sectors which indicate confidence from the entire market rather than one particular sector.
Profit-taking was seen on Wednesday, before buying was resumed on Thursday
The PSX closed on a Wednesday trading session just slightly higher, gaining merely 118.04 points, or 0.07 percent, and closing at 180,511.02 due to profit-taking following a positive rally for two straight sessions. Despite the relatively lower gain on Wednesday, the improved sentiments over declining international oil prices and geopolitics helped the PSX soar on Thursday.
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World Markets React Nikkei at a New High
As far as Asian markets are concerned, they reacted with a sense of cautious optimism due to the official signing of the pact. The Nikkei 225 index climbed above 71,000 for the first time, registering a new high on the back of strong performances from semiconductor stocks and companies with AI exposure, and South Korean markets were up by 0.9%.
Crude oil prices tumble amid reversal of Hormuz risk premium
The price of crude oil declined on Thursday, amid renewed confidence in the recovery of oil flows via the Strait of Hormuz due to the official signing. Prices of West Texas Intermediate crude fell by 1.25 percent to $75.83 per barrel and Brent crude by 1.40 percent to $78.41 per barrel.
Japan’s ten-year government bond yield climbed by two basis points to 2.620%, approaching its highest level since June 16 amid improved risk sentiment and easing geopolitical tension. The yield reached 2.63% at its peak intra-day trading.
The current rally of the KSE-100 following the Iran-US peace deal shows that the equity market of Pakistan is sensitive to diplomatic news from the Middle East because of Pakistan’s dependence on oil imports. As the president of the United States is making an explicit threat about the resumption of military operations against Iran, there is a high chance that this threat may turn out to be a reality, but for the time being, everyone is hoping that this won’t happen.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
