KARACHI: After a positive performance in the outgoing month, the Pakistan Stock Exchange (PSX) opened the first session of June on a negative note as nervousness gripped equity investors, prompting hasty selling amid a spike in inflation and growing uncertainty surrounding the peace diplomacy.
The United States and Iran failed to reach a concrete agreement, causing a flare-up in tensions and a surge in oil prices, which dragged the benchmark KSE-100 index down to below 171,000 points intraday.
Topline Securities Ltd said bears firmly dominated the trading session as investor sentiment turned sharply negative, dragging the benchmark index deep into the red. The market remained under persistent selling pressure throughout the session, with the benchmark index touching an intraday low of 3,565 points before eventually closing at 170,600, down 3,362 points or 1.93 per cent.
The negative momentum was driven primarily by a surge in international oil prices amid escalating geopolitical tensions in the Middle East, as the conflict between Israel and Lebanon intensified. Elevated oil prices reignited concerns about inflation and external account pressures, dampening investor confidence and triggering broad-based selling across key sectors.
Rising oil prices on US-Iran deadlock trigger extensive selling
Adding to the cautious mood was inflation based on the Consumer Price Index, which clocked in at 11.66pc for May, compared with 10.89pc in the previous month, signalling a pickup in price pressures and further weighing on investor sentiment.
Ali Najib, Deputy Head of Trading at Arif Habib Ltd, said the PSX ended the session on a weak note, with investor sentiment remaining fragile in the absence of a conclusive US–Iran peace agreement over the weekend, prompting broad-based selling across key sectors.
While inflation hit the highest level since June 2024, it remained broadly in line with Bloomberg’s forecast of 11.5pc and came in below the market consensus estimate of 12.2pc.
The bearish momentum was largely fuelled by heavyweight stocks, including Engro Holdings, Fauji Fertiliser, Lucky Cement, Oil and Gas Development Company, Pakistan Petroleum, Hub Power, United Bank, Engro Fertiliser, Meezan Bank, and Habib Bank. These stocks emerged as the top laggards, collectively dragging the index down by 2,127 points.
Despite the sharp decline, market activity remained healthy, with trading volume rising 6.25pc to 589 million shares. However, the traded value plunged 21.75pc to Rs31.9 billion, indicating continued investor participation amid heightened volatility. Dewan Cement emerged as the volume leader, with 43 million shares.
Published in Dawn, June 2nd, 2026
