PSX declines further due to geopolitical and policy rate apprehensions.

The adverse trend on the Pakistan Stock Exchange (PSX) persisted on the second day of the trading week due to increasing geopolitical tensions and an increase in the policy rate.

In the initial trading session, the KSE-100 index fell by more than 1,000 points, reaching 168,171 points, down from the prior close of 169,497.35.

Market analysts indicated that investors were apprehensive due to ongoing geopolitical tensions affecting market sentiment.

One day prior, the State Bank of Pakistan raised the policy rate by 100 basis points to 11.50 percent, considering the turmoil in the Middle East and its ensuing effects on the macroeconomic outlook, along with rising inflationary expectations.

The Monetary Policy Committee (MPC) convened at the SBP to assess the geopolitical landscape and significant developments, ultimately resolving to raise the policy rate to maintain macroeconomic stability, essential for attaining sustainable economic growth, as articulated in the Monetary Policy Statement released by the central bank.

The Committee acknowledged the risks to the macroeconomic forecast and the uncertainties stemming from the protracted Middle East crisis, especially the elevated global oil prices, shipping costs, and insurance premiums.