The Pakistan Stock Exchange (PSX) gained over 2,000 points on Thursday, a day after the US announced pausing many of his new tariffs — barring China — for 90 days.
The rebound follows global market turmoil in response to fears that the trade war between the United States and China would escalate.
The benchmark KSE-100 index opened on a highly positive note, gaining 3,331.01 points, or 2.92 per cent, to reach 112,891.48 at 9:33am from the previous close of 114,153.15.
However, the shares soon witnessed a sharp fall, going as low as 116,232.29 and remaining below 117,000 till 2pm — still trading in green.
At 2:04pm, the index had gained 2,384.50 points, or 2.09pc, to reach 116,537.65 from yesterday’s close.
Mohammed Sohail, chief executive at Topline Securities, noted: “Following international markets trend, PSX opened up 3,000 points close to 2.5pc.”
Awais Ashraf, research director at AKD Securities, noted that the pausing of tariffs on countries other than China has “made investors bullish on the KSE-100 index, as the focus now shifts back to improving macroeconomic fundamentals”.
“As an import-driven economy with significant oil dependence, making up 29%pc of the total import bill, the recent fall in oil prices will bodes well for Pakistan, offering relief on both the external account and inflation fronts,” he said.
Ashraf highlighted $10 per barrel decline in oil prices was “expected to reduce the country’s import bill by $2.1bn”. “Meanwhile, the correlation of oil with Gulf Cooperation Council remittances remains weak,” he added.
Yesterday, Ashraf had pointed out that the hike in US tariffs on China has “heightened recession risks due to a slowdown in global growth, dampening investor sentiment at the PSX”.
“However, lower commodity prices — especially oil — and a potential competitive advantage from the new tariffs could positively impact our external account,” he predicted.
Trump’s sudden reversal of tariffs came less than 24 hours after steep new tariffs kicked in on imports from dozens of trading partners. The new trade barriers have hammered markets, raised the odds of recession and prompted retaliatory responses from China and the European Union.
Trump said he would raise the tariff on Chinese imports to 125pc from the 104pc level that took effect at Wednesday midnight. At the same time, he said he would lower them on other countries also subject to his new targeted duties.
More to follow