KSE-100 Posts Massive 4,500-Point Rally as Oil Drops Below $92

KARACHI: Iran's indication of stopping its aggression along with the fall in the price of Brent crude by over five percent helped Pakistani buyers re-emerge on the Pakistan Stock Exchange floor on Monday. It marked the long-awaited relief rally for the local stock market, which has fallen sharply over the last two weeks due to geopolitical developments. The rise of the KSE-100 index by 4,449.57 points or 2.60 percent to 175,470.77 at 9:48 am was one of the biggest rises ever on a single day for the stock market.

However, the rebound registers a considerable gain from the prior week, where the KSE-100 lost 4,781.60 points, equivalent to a 2.7 percent decline for the week attributed to the blockades announced by Houthi rebels in the Red Sea and Brent oil prices rising above $100 per barrel for the first time in nearly two months.

The bullish sentiment of the PSX KSE-100 bulls amidst an Iran ceasefire truce has helped the index regain all of last week’s loss in just one day – however, the index is still around 6,770 points away from its level before the crisis started.

1. Iran signals ceasefire

Iran said it will cease fire if the USA reciprocates. US troops were allegedly running low on ammo and seemed receptive to the pause. PSX KSE-100 bulls Iran ceasefire news diminished the tail risk of further Gulf shipping disruption - the only force that has harmed market sentiment in last two weeks.

2. Oil declines 5.2%

The pause in Strait of Hormuz conflict caused Brent to fall by 5.2% to $91.73 per barrel, while US crude declined by 5.4% to $84.45. For Pakistan – which sources more than 80% of its energy needs – $5 drop in Brent crude reduces its import costs, inflationary pressures and FX reserves all at once.

3. World markets rally on lower oil prices

Lower oil prices offered respite from rising fears of inflation - causing markets to cut down their expectation of Fed's rate hike.The overall positive market sentiment served as an added boost to Pakistan's markets.

This rally in the PSX KSE-100 stock index was due to the Iran ceasefire, and the buying had all sectors participating in the up move; unlike the prior week, where selling was taking place in all sectors:

• Oil and gas exploration: OGDC, PPL, POL, MARI all moving up amid stabilization in oil prices, which eases the wider economic disruption risks
  

• OMC: PSO up amid stability in the fuel supply chain
  

• Commercial banks: HBL, MCB, MEBL bouncing back amid easing credit risks and economic slowdown risks
  

• Power generation companies: HUBCO and peers moving up on fuel costs
  Cement and auto assembly companies recovering on improved expectations of economic activity

The bulls in the Iran ceasefire PSX KSE-100 coincide with an important development in the country. Today, the Monetary Policy Committee of the State Bank of Pakistan will make its announcement regarding the next 50-day period and it is generally anticipated that the MPC will keep the policy rate unchanged at 11.5 percent.

The inflation relief provided through the ceasefire pause due to the decline in oil prices makes it less likely for the MPC to tighten its policy – but, the inflation rate of 11.7 percent recorded in May 2026 and the increasing fuel prices due to changes made in daily petroleum prices leave no space for easing.

ALSO READ: Trump's Ceasefire Announcement Jolts Markets as PSX Falls and Oil Prices Surge

There is an important caveat regarding the return of PSX KSE-100 bulls during the Iran ceasefire pause. The Yemen-based Houthis who are allied to Iran are not part of the ceasefire as they continue their attacks on Saudi Arabia's oil facilities on the Red Sea coastline, thus posing a danger to yet another channel that is important for international oil trade.

In this respect, while a genuine ceasefire between Iran and the US will help ease the market worries that have been fueling oil price drops for the past two weeks, it is still possible for Houthi attacks to complicate matters again.

The stock market of Pakistan, oil cost of imports, and oil pricing system will continue to be impacted by happenings in the Strait of Hormuz and the Red Sea – the return of bulls on PSX KSE-100 index amidst the Iranian ceasefire is a welcome development for investors operating in one of the most volatile energy landscapes in years.