Karachi: Market sentiment took a hit this week as the KSE100 Index dropped by 7,677 points, closing at 162,994 points, amid increasing geopolitical tensions and economic adjustments. The decline of 4.5% week-on-week was accompanied by a 30% fall in the average daily traded volume, which hit 1.2 billion shares. The financial markets reacted to the collapse of diplomatic talks between Iran and the United States, which led to the cancellation of a planned visit by U.S. envoys to Pakistan.

According to AKD Securities Limited, the decision by the U.S. President to cancel the trip shifted focus towards military options concerning Iran, keeping oil prices elevated throughout the week. Brent crude for June 26 delivery reached a weekly high of $126 per barrel. The situation was compounded by the State Bank of Pakistan's decision to raise the policy rate by 100 basis points to 11.5%. This marked the first increase in over two-and-a-half years, driven by the Monetary Policy Committee's assessment that the prolonged Middle East conflict could keep inflation above the target range in the coming quarters.

Despite these challenges, there was a positive development with the International Monetary Fund's Executive Board scheduled to meet on May 8 to consider a $1.2 billion tranche under the Extended Fund Facility and Rapid Financing Instrument programs. The State Bank's foreign exchange reserves increased to $15.8 billion as of April 24, representing a $730 million rise week-on-week. Meanwhile, the currency remained stable, closing the week at 278.8 Pakistani Rupees to the U.S. Dollar, up by 0.03% compared to the previous week.