Monday’s red trading on Pakistan Stock Exchange (PSX) resulted in more than 600 points in intraday trading loss.
The benchmark KSE-100 index fell 671.10 points, or 0.83 percent, from its previous closing of 81,292.13 points at 12:30 pm to 80,621.03 points.
According to Awais Ashraf, director of research at AKD Securities, the index is being dragged down by “selling pressure in two major stocks, Hub Power and Mari Petroleum.”
“Mari Petroleum is under stress after the distribution of bonus shares to investors, while Hub Power’s decline is caused by the threat of adjustment of power plant contracts,” he said.
“On the plus side, we think that approval of the IMF Expanded Fund Facility will boost the economy because it guarantees that the external account stays fully funded despite this,” he continued.
Geopolitical Tensions and Trading Instability: The Middle East Impact on World Shares
Further monetary easing and a decrease in inflationary pressure could result from such a situation, he noted, adding that investor interest would probably “remain focused on stocks with higher yields on dividends and those positioned to benefit from monetary easing.”
The bearish momentum was attributed by Shahab Farooq, research director at Next Capital Limited, to the “overall situation in [the] Middle East making investors nervous.”
After Israel executed Hezbollah’s chief, Hassan Nasrallah, on Saturday, regional tensions in the Middle East escalated and created geopolitical instability. It carried out more strikes on Monday, eliminating three Palestinian officials in Lebanon and a prominent member of Hamas.
Additionally, the US has stated that it is stepping up its air support capabilities in the Middle East and raising the readiness of its troops for deployment there.
As fresh policy initiatives in China were countered by turmoil in the Middle East, Asian share markets were cautious, and the Nikkei fell on worries that Japan’s incoming prime minister will support normalizing interest rates.
Significant volatility in markets is being brought on by geopolitical tensions in the Middle East. Investor confidence has declined in the wake of Israel’s military activities, causing a flight from riskier assets. A number of global indices have declined as a result of traders choosing safer products like gold and bonds. Trading behavior is being particularly influenced by the threat of disrupted oil supply resulting from regional wars, as rising energy costs exacerbate the challenges of economic recovery.
Investors seeking stability in the midst of volatility in the local market have turned their focus to equities with greater dividends as a result of this uncertainty. Future U.S. economic data, particularly the payrolls report, is being eagerly watched by analysts as it could influence Federal Reserve interest rate decisions. Unexpected rate cuts have the potential to either increase or decrease market confidence, highlighting the interdependence of geopolitical developments and international trade dynamics.
The blue-chip CSI300 gained 7.7pc last week, up from a 16pc gain the week before, because to the stimulus rush in China, which helped offset a weak manufacturing survey.
Despite the risk of increasing supply, geopolitical uncertainty was still contained in oil prices despite the ongoing Israeli strikes throughout Lebanon.
This week is jam-packed with important US economic statistics, one of which is the payrolls report that may determine whether or not the Federal Reserve cuts interest rates excessively again in November.
Investors were waiting nervously for more guidance from new Prime Minister Shigeru Ishiba, who has previously criticized the Bank of Japan’s loose policies. The Nikkei led the early action with a loss of 4.6 percent. Over the weekend, though, he seemed more accommodating, stating that given the status of the economy, monetary policy “must remain accommodative.”
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