Karachi: The KSE-100 Index experienced a significant decline over the week, dropping by 3.5% as regional geopolitical tensions affected investor confidence and led to an increase in Brent crude prices, which reached approximately $85 per barrel. The market's downturn comes amid a backdrop of challenging economic indicators for Pakistan.

According to JS Global, Pakistan reported a current account deficit of $649 million in June 2026, resulting in a cumulative deficit of $139 million for the fiscal year 2026. This was largely attributed to a sharp 22% year-on-year increase in imports in June 2026, which expanded the monthly trade deficit by 46% year-on-year to $3.55 billion. The cumulative trade deficit for FY26 grew by 25% year-on-year to $33.6 billion.

The report also highlighted a contraction in Large Scale Manufacturing output by 0.98% year-on-year in May 2026, though the overall growth for the first eleven months of FY26 remained at 5.77% year-on-year. On the fiscal front, the government retired a record Rs2.9 trillion in domestic debt during FY26 and is seeking a $6.7 billion long-term oil financing facility from Saudi Arabia, which would have a 15-year term at a concessional rate of 1% to ensure energy security.

Despite the government's efforts, the circular debt target of Rs1.614 trillion for the end of June 2026 was missed, with the actual stock reaching Rs1.835 trillion. Additionally, the State Bank of Pakistan's foreign exchange reserves fell by $1.2 billion week-on-week to $17.2 billion, mainly due to external debt payments.