Pakistan’s stock market came under heavy pressure on Thursday, with investors reacting sharply to growing uncertainty in the Middle East. The benchmark KSE-100 index of the Pakistan Stock Exchange plunged by over 3,800 points during intraday trade, slipping to a low of 161,993 before trimming some of its losses later in the session. The sell-off reflected rising nervousness in global markets as tensions between Iran and the United States showed little sign of easing, dampening hopes of a near-term diplomatic breakthrough and leaving investors on edge.The plunge comes after Islamabad’s equities climbed dramatically on Wednesday and the index recorded its biggest intraday gain, surging by over 12,000 points. That rise was fuelled by optimism after reports of a temporary ceasefire between the US and Iran, which had briefly eased geopolitical concerns and lifted sentiment across regional markets.
Earlier developments this week had pointed to cautious optimism. Trump said the US had agreed to a two-week pause in attacks and had received a 10-point proposal from Iran, which he described as a workable basis for negotiations.“This will be a double-sided CEASEFIRE!” he wrote on Truth Social. “The reason for doing so is that we have already met and exceeded all military objectives, and are very far along with a definitive agreement concerning long-term PEACE with Iran, and PEACE in the Middle East,” he added.Iran had agreed to allow safe passage through the Strait of Hormuz for two weeks. The country’s foreign minister issued a statement on behalf of the Supreme National Security Council, thanking Pakistan’s leaders for facilitating the talks.Tehran’s Supreme Security Council later had said that negotiations with the United States would begin on April 10 in Islamabad, after submitting its proposal via Pakistan, though it added that the talks did not signal an end to the conflict.However, hopes of de-escalation quickly faded.After the brief ceasefire agreement, which initially lifted global markets, Israel continued parallel operations against the Iran-aligned Hezbollah in Lebanon. Iran accused both Israel and the US of violating the ceasefire terms and said proceeding with peace talks under such conditions would be “unreasonable.”The Strait of Hormuz, which had been slated to reopen for shipping, remained closed to vessels. “Violations of the ceasefire have been reported at a few places across the conflict zone, which undermine the spirit of the peace process,” Pakistani Prime Minister Shehbaz Sharif said in a post on X.Trump also reiterated on Truth Social that the US would ensure the Strait remained open and secure:“All US ships, aircraft, and military personnel, with additional ammunition, weaponry, and anything else appropriate and necessary for the lethal prosecution and destruction of an already substantially degraded enemy, will remain in place in and around Iran until the REAL AGREEMENT is fully complied with.”Going on further, he added, “If for any reason it is not, which is highly unlikely, then the ‘Shootin’ Starts,’ bigger, better, and stronger than anyone has ever seen. It was agreed a long time ago, and despite all fake rhetoric to the contrary—NO NUCLEAR WEAPONS, and the Strait of Hormuz WILL BE OPEN & SAFE. In the meantime, our great military is loading up and resting, looking forward to its next conquest. AMERICA IS BACK!”Investors have remained on edge for weeks as tensions in the Middle East have triggered sharp volatility across markets. The KSE-100 index had earlier seen a severe setback on March 2, plunging more than 16,000 points amid reports of a high-profile assassination linked to the Supreme Leader. Meanwhile, the Middle East crisis has been going on for over a month, draining oil supplies across the world. After US and Israel launched joint strikes on Iran on February 28, Tehran has choked the crucial Strait of Hormuz, effectively disrupting 20% of global energy supplies.
