Volatility persisted at the Pakistan Stock Exchange (PSX) on Friday as investor anxiety mounted ahead of the federal budget announcement. The benchmark KSE-100 Index dropped over 400 points during the first half of the trading session, trading at 118,742.59 as of 9:45am, down 410.45 points (0.34%).
Sectors Under Pressure
Key sectors facing heavy selling included:
-
Automobile Assemblers
-
Commercial Banks
-
Oil & Gas Exploration
-
Oil Marketing Companies (OMCs)
-
Power Generation
Index-heavyweights such as HUBCO, PSO, SSGC, MARI, OGDC, PPL, POL, UBL, and NBP all traded in the red, reflecting widespread investor caution.
Budget Anxiety Fuels Sell-Off
Market analysts attribute the bearish sentiment to uncertainty over the upcoming federal budget, particularly concerns surrounding new IMF-driven taxes. Thursday’s session also closed in the negative, with the KSE-100 Index falling 778 points (0.65%) to close at 119,153, as investors remained on the sidelines awaiting clarity.
Global Markets Update: Mixed Reactions to US Tax Bill
Asian markets showed modest gains on Friday, recovering slightly after a turbulent week. The MSCI Asia-Pacific Index (excluding Japan) edged up 0.1%, though still on track to post a 0.4% weekly loss, snapping a five-week winning streak.
Wall Street saw limited movement despite upbeat US PMI data indicating a pickup in business activity during May. Gains were capped by renewed concerns over long-term US debt sustainability, following the passage of President Trump’s tax bill by the US House of Representatives.
While the bill fulfills many of Trump’s campaign pledges, it is expected to increase the US national debt by $3.8 trillion over the next decade, ballooning the total to $36.2 trillion.
In response, Moody’s downgraded the US credit rating, citing escalating fiscal risks. Treasury yields surged, particularly on long-term bonds, though some buying returned as yields hit attractive levels. The 30-year Treasury bond yield fell by 1 basis point to 5.037%, retreating from a 19-month high.
Outlook: All Eyes on Pakistan’s Federal Budget
With Pakistan’s federal budget around the corner, investor sentiment is expected to remain subdued. Market watchers are closely monitoring for:
-
New tax measures
-
IMF conditions
-
Relief packages or incentives for key industries
Until there’s clarity, analysts expect continued choppiness in the local bourse and recommend a wait-and-watch strategy for retail investors.
