Karachi: The KSE-100 Index experienced a notable resurgence this week, achieving a gain of approximately 3% week-on-week, as it snapped a three-week losing streak. This recovery was largely fueled by a decrease in geopolitical tensions following a halt in hostilities between the United States and Iran, which subsequently led to a 9% decline in Brent crude prices, bringing them below $90 per barrel.

According to JS Global, despite the rebound, the situation remains unstable. On the macroeconomic front, the State Bank of Pakistan (SBP) maintained the policy rate at 11.5%, acknowledging inflationary risks stemming from the conflict, while projecting a GDP growth rate of 3.5-4.5% for the fiscal year 2027. Domestically, petrol and high-speed diesel prices were increased by Rs4.63 per litre and Rs15.38 per litre, respectively. The government, in the absence of an IMF-supported revenue plan, ruled out any reduction in the Petroleum Development Levy (PDL).

In a positive development, Saudi Arabia extended its $5 billion deposit for an additional three years, which has lowered Pakistan's external financing requirement for fiscal year 2027 to $21.5 billion. Separately, the United States imposed a 10% tariff on Pakistani exports, replacing the previous global tariff of the same rate. However, this revised tariff remains lower compared to those imposed on some regional counterparts, such as India and Sri Lanka, which face tariffs of 12.5%.

On the fiscal side, the government exceeded its fiscal year 2026 Public Sector Development Program (PSDP) revised target of Rs820 billion by Rs96 billion. Meanwhile, the SBP's foreign exchange reserves saw a week-on-week decline of $229 million, bringing the total to $17 billion.