PSX recovers by 600 points after day of losses

The Pakistan Stock Exchange on Tuesday began to recover as shares gained 622 points, a day after the index experienced losses.

The benchmark KSE-100 index was up by 622.95, or 0.54 per cent, to stand at 115,532.43 at closing from the last close of 114,909.48.

Yousuf M. Farooq, director research at Chase Securities, said, “The stock market has rebounded from yesterday as Asian markets recover.

“Additionally, media reports that the foreign minister has contacted [US Secretary of State] Marco Rubio and that Pakistan has initiated discussions on tariffs are being viewed as positive developments,” he said.

He highlighted that most participants believe that Pakistan “should remain relatively insulated from the impact of tariffs, given that exports make up a small portion of the economy”.

“In fact, lower commodity prices could potentially boost domestic consumption,” he said.

According to Farooq, yesterday’s decline resulted in a Rs474 billion cumulative loss.

However, he added that yesterday’s decline was “very normal” and that “companies this morning continue to do what they’re doing”.

Awais Ashraf, director research at AKD Securities, noted that the market rebounded “as investors seized buying opportunities, buoyed by Wall Street’s recovery and positive momentum in Asian markets”.

“In our view, yesterday’s market decline was unwarranted, especially considering the favourable implications for Pakistan amid the ongoing trade war,” he said, adding that he believed “the newly imposed tariffs offer a comparative advantage to Pakistan’s exports, given our relatively lower tariff rates compared to peers”.

“Additionally, softer commodity prices are expected to support improvement in the country’s external account position,” he said.

Mohammed Sohail, chief executive at Topline Securities, noted that the Pakistani stocks had rebounded “in line with recovery in US and global markets”.

Yesterday, shares plunged by 3,882 points amid global market turmoil following China’s retaliatory tariffs against the US.

Trade was suspended early at the PSX for an hour after the benchmark index plummeted by 6,000 points triggering the suspension, only to drop another 2,000 points when trading resumed.

Analyst had attributed the decline to “investors’ fears that tariff hikes could lead to global recession through weaker demand”.

Rebound in Japan provides some respite for battered markets

Asian stocks bounced off more than one-year lows and US stock futures pointed up on Tuesday, but many investors remained on edge even as they hoped Washington might be willing to negotiate some of the aggressive tariffs that have unleashed turmoil in markets.

A 5.6pc rebound in Japan’s Nikkei far outpaced other regional markets, with Treasury Secretary Scott Bessent tasked with leading trade negotiations with Tokyo.

“Importantly, a little ray of sunshine is starting to emerge that gives hope that the US is genuinely open to trade negotiations, (with) the most significant being Japan with Treasury Secretary Bessent,” said Tapas Strickland, head of market economics at National Australia Bank.

Strickland, however, noted volatility remains extremely elevated, with the “rare event” of the VIX index spiking above 60 overnight for only the second time since the pandemic.

Indeed, the uptick in Tokyo comes after a steep selloff in recent days, while China’s markets rose only modestly after the country’s sovereign wealth funds stepped in to buy shares. Chip-export-dependent Taiwan’s benchmark tumbled 5pc, a day after suffering its worst fall on record.

MSCI’s broadest index of Asia-Pacific shares added 1.7pc to climb from its lowest level since February of 2024, but that followed a more than 10pc dive over the previous two sessions, and much of the rebound came from Japanese shares.

Thai stocks dropped nearly 6pc in catch-up selling from a holiday on Monday, while Indonesia returned from a week-long holiday to 9pc losses.

Hong Kong’s Hang Seng climbed 1.6pc after its steepest drop since the 1997 Asian financial crisis on Monday. Mainland Chinese blue chips added 1pc, with help from buying by sovereign fund Central Huijin Investment and other state-backed investors.

The Chinese yuan fell to 7.3677 per dollar in the offshore market, the weakest in two months, before rebounding to be slightly stronger than Monday’s close at 7.3393.

The heightened uncertainty in markets wasn’t helped by shifting headlines on trade as investors looked for respite from the sharp market volatility.

An erroneous report by CNBC that President Donald Trump was considering a 90-day pause on tariffs for countries other than China was quickly denied by the White House.

Trump also dug in his heels over China, vowing additional 50pc levies if Beijing does not withdraw retaliatory tariffs on the United States. Beijing said on Tuesday it will never accept the “blackmail nature” of US tariff threats.

More to follow