The Pakistan Stock Exchange (PSX) continued its positive trend on Tuesday, with the KSE-100 Index closing above the 188,000 mark. Investor optimism was fueled by expectations of a forthcoming interest rate cut.
Market Movement and Closing Figures
The trading session began with the benchmark index dropping sharply to an intraday low of 187,192.01. However, the market rebounded steadily throughout the morning and early afternoon. Despite some profit-taking later in the day, the index reached an intraday high of 188,958.37 before settling at 188,621.78. This marked a gain of 860.09 points, or 0.46%, by the close.
Factors Driving the Rally
The upward momentum is largely attributed to growing anticipation of a policy rate reduction at the upcoming Monetary Policy Committee (MPC) meeting scheduled for January 26. Recent Treasury bills and Pakistan Investment Bond auctions have signaled further monetary easing, reinforcing these expectations.
IMF Economic Growth Revision
In a significant update, the International Monetary Fund (IMF) lowered Pakistan’s GDP growth forecast for the current fiscal year to 3.2%, down from the 3.6% projected in its October 2025 World Economic Outlook. The IMF also estimated Pakistan’s GDP growth at 3.0% for 2025, with projections of 3.2% for fiscal year 2026 and 4.1% for 2027.
Previous Day’s Market Performance
On Monday, the PSX extended its bullish streak, closing at a record high. Broad-based buying, positive corporate earnings results, and rate cut expectations contributed to the KSE-100 Index rising by 2,662.86 points, or 1.44%, to finish at 187,761.69 points.
Global Market Context
While Pakistan’s market showed strength, Asian stocks declined on Tuesday amid renewed trade tensions. The US dollar weakened, and US Treasury yields climbed to their highest levels in over four months. Concerns were heightened by US President Donald Trump’s proposal to acquire Greenland and threats of additional tariffs, which risk escalating trade disputes with Europe.
These developments prompted investors to seek safe-haven assets such as the Swiss Franc and gold. The renewed trade tensions have revived the ‘Sell America’ trade, characterized by selling US stocks, the dollar, and Treasuries. Early trading saw Nasdaq and S&P 500 futures fall by 1%, while the 10-year US Treasury yield rose to 4.265%, the highest since early September. MSCI’s broad Asia-Pacific index excluding Japan declined by 0.44%, moving away from recent record highs.
