Karachi: The Karachi Stock Exchange (KSE-100) faced ongoing volatility this week, influenced by political uncertainties and mixed economic signals, including rating adjustments and trade deficit improvements.

According to JS Global, the KSE-100 index's fluctuations were driven by intense selling pressure due to political noise throughout the week. Despite these challenges, the market saw a 6% week-over-week increase in average daily trading volumes. On the economic front, Fitch Ratings upgraded Pakistan's long-term foreign currency issuer default rating to 'CCC+' from 'CCC', while Standard and Poor's maintained the country’s long-term and short-term sovereign credit ratings at 'CCC+' and 'C' respectively.

July’s consumer price index dropped to an 11.1% increase year-on-year, marking a 33-month low, per data from the Pakistan Bureau of Statistics. The trade deficit also narrowed to a five-month low of US$1.9 billion, reflecting the lowest imports seen in ten months. Additionally, the government has decreased petrol and diesel prices due to lower ex-refinery costs, reducing them by Rs6.2 and Rs10.9 per liter, respectively.

The financial market also reacted to stable foreign exchange reserves held by the State Bank of Pakistan, which remained unchanged at US$9.1 billion. Moreover, anticipation grows for the approval of a new US$7 billion IMF facility expected within the month. There is also hopeful expectation for progress in Chinese debt restructuring, which could positively influence Pakistan’s future debt repayment schedules.

The week concluded with notable stock-specific activity, particularly in United Bank Limited (UBL) and Fauji Fertilizer Company (FFC), spurred by strong second-quarter earnings and dividend announcements.