The benchmark KSE-100 index lost points quickly after trading started on Monday, as the Pakistan Stock Exchange (PSX) began the week with a loss.
The benchmark dropped 652.13 points, or 1.53%, by 10:46 a.m. to hit 41,939.38 points.
Raza Jafri, Head of Research at Intermarket Securities, claimed that the performance of global stocks had an impact on the KSE-100 index.
“Asian markets are down significantly today, following the Friday’s significant 3 percent loss in US markets. This is also happening at the KSE-100.
Jafri stated that even though the International Monetary Fund (IMF) was about to resume because its executive board was scheduled to convene today, the market was still cautious due to the floods and the political climate.
Jerome Powell, the head of the US Federal Reserve, said on Friday that the bank would raise interest rates as high as necessary to stifle economic expansion and would keep them there “for some time” in order to lower inflation, which is currently running at more than three times the Fed’s 2 percent target.
Following Powell’s speech, a measure of international stock markets declined as US short-term Treasury yields increased, according to Reuters.
The MSCI index of global stocks experienced its worst day in more than two months on Friday, losing 2.47 percent.
“Stocks [at the PSX] witnessed bearish activity ahead of crucial IMF meeting for the revival of bailout package amid escalating political tensions,” Ahsan Mehanti of Arif Habib Corporation commented today.
The decline in global equity markets, “dismal news” regarding the current account deficit in July, the depreciation of the rupee, and taxes imposed prior to the IMF meeting, he continued, had all contributed to the bearish trend.
Amir Shehzad, director of First National Equities Limited, claimed that Taimur Khan Jhagra’s letter to Federal Finance Minister Miftah Ismail, in which he expressed his administration’s inability to provide a provincial surplus this year—a crucial condition previously agreed upon for the revival of the IMF programme—was the main cause of the stock market’s decline.
According to him, the market was concerned that the letter would cause the IMF executive board to refuse to approve the release of the loan tranche. “The stock market could collapse if the IMF does not accept the continuation of the program.”
Shehzad asserted that he thought this would not occur.
The market was keeping an eye on the losses brought on by the country’s recent floods in addition to the concerns relating to the IMF, he said.