KSE-100 Index Surges Nearly 4,000 Points After US Midterms

The KSE-100 index jumped almost 4,000 points on Wednesday, November 4, in one of the strongest single-day gains in its recent history. Investors at the Pakistan Stock Exchange (PSX) bought heavily after the US midterm results raised hopes of calmer relations between Washington and Tehran.

The benchmark closed at 172,013.48 points, up 3,994.62 points, or 2.38%, according to The Express Tribune. It had ended Tuesday at 168,018.87, Business Recorder reported.

How the KSE-100 index moved during the day

The market opened firmly in positive territory. By about 10 AM, the index was already up more than 1,700 points and soon crossed the 170,000 mark.

After that, it eased slightly in late morning as some traders took profits. However, buying returned around midday. By the close, the index was near its intraday high of 172,286.99 points.

In addition, trading activity rose sharply. Volume on the all-share index climbed to 841.6 million shares, up from 517.3 million on Tuesday. The value of shares traded rose to Rs35.4 billion, compared with Rs20.7 billion a day earlier.

Moreover, gains were broad. Of the 499 companies traded, 368 closed higher, 103 fell and 28 were unchanged. TPL Properties led volumes with about 67.9 million shares, followed by the Bank of Punjab and K-Electric.

Why investors were buying

Analysts linked the rally mainly to events abroad. Democrats won control of both houses of the US Congress, a heavy defeat for President Donald Trump’s Republicans.

Saad Hanif, head of research at Ismail Iqbal Securities, told Business Recorder that investors saw a Democratic sweep as good for regional stability. In his view, the market expects “a more measured approach from Washington and a stronger preference for negotiation over confrontation”.

That, in turn, feeds hopes of lower oil prices and easing inflation. Both matter greatly for Pakistan, which relies on imported fuel.

Sana Tawfik, head of research at Arif Habib Limited, pointed to several factors. She cited buying by institutions, especially mutual funds, and reports of a draft proposal in US-Iran talks. She also noted that oil prices had steadied at around $103 a barrel.

Oil prices and the wider picture

Global oil prices eased during the session. Brent crude fell $1.75 to $101.85 a barrel by mid-morning in London, The Express Tribune reported. US crude was down to about $94.91.

Even so, prices remain far higher than before the US-Israeli war on Iran began in February. Moreover, shipping through the Strait of Hormuz is still heavily disrupted.

By contrast, markets elsewhere were mixed. In Asia, Japan’s Nikkei fell 3% and South Korea’s KOSPI slid 1.6%, while US stock futures also dropped. Business Recorder noted that investors there were weighing what a Democratic Congress could mean for tech, spending and regulation.

At home, the Pakistani rupee edged up slightly. It ended inter-bank trading at 276.70 to the dollar, one paisa stronger.

Gold also rose sharply. According to Business Recorder, the price per tola in Pakistan climbed Rs13,900 to Rs426,036, citing rates from the All-Pakistan Gems and Jewellers Sarafa Association. Meanwhile, the international price rose $139 to $4,035 an ounce.

A caution for investors

Wednesday’s surge came on top of a rise of more than 1,450 points on Tuesday. As a result, over two sessions, the index has gained over 5,400 points.

Nevertheless, rallies driven by headlines can reverse quickly. Iran’s supreme leader warned on the same day that US policy was unlikely to change. In addition, both the US and Israel have threatened renewed strikes if talks fail.

Analysts said investors are watching the US-Iran talks closely. Any setback there, or a fresh jump in oil prices, could weigh on the market again. As always, past gains are no guarantee of future returns.

Finally, investors should note the calendar. The PSX and the State Bank of Pakistan will stay shut on Monday, November 9, for Allama Iqbal Day.