KSE-100 rallies by over 4,000 points after US, Iran reach preliminary agreement

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index gained over 4,000 points on Monday as the US and Iran reached a preliminary agreement aimed at ending a war that began over three months ago and upended the global economy. The KSE-100 index rose by 4,639.92 points (2.69 per cent) to close at 177,039.82 from the previous close of 172,399.90. The market marked an intraday low of 175,085 at 11am, eventually reaching an intraday high of 177,176.72 at 3:25pm. Yousuf M. Farooq, director of research at Chase Securities, said the market opened higher today as sentiment improved following the announcement of a deal between the US and Iran, along with expectations that the Strait of Hormuz would remain open. Oil prices also opened lower, easing concerns over inflationary pressures going forward, he noted. He said that investors were awaiting today’s monetary policy announcement. Later in the day, the State Bank of Pakistan announced that it would keep the policy rate unchanged at 11.5pc. The market continues to trade at a price-to-earnings multiple below its long-term average, while the current account remains under control. The reduction in super tax and a budget that signals fiscal discipline have further strengthened the medium-term outlook for equities. “A sustained decline in oil prices, combined with lower interest rates over the next two years and continued earnings growth, could support an upward rerating of the stock market,” he said. Awais Ashraf, director of research at AKD Securities, also attributed the positive trend to the US-Iran agreement. “Reaching a preliminary agreement to end the conflict between the US and Iran boosted sentiment at the PSX. Moreover, the continuation of fiscal consolidation in the recently announced budget, coupled with relief for small and medium-sized businesses through the abolition of the super tax, has further supported market confidence,” he said. However, he too said that investors remained cautious ahead of the MPC anno