The Pakistan Stock Exchange (PSX) on Monday came under severe selling pressure, tracking a broader global market decline, as fears of rising inflation intensified amid a global oil crisis.

The bourse plunged nearly 3,800 points, triggered by stalled US-Iran peace negotiations, which kept tensions high around the Strait of Hormuz and pushed crude prices above $110.91 per barrel. The market was further jolted by reports of an attack on a UAE nuclear power facility, while US President Donald Trump was expected to review possible military options, adding to geopolitical uncertainty.

The free fall continued throughout the trading session, with investors opting to exit risk assets amid concerns over inflationary pressures and potential disruptions to global energy supplies.

The benchmark KSE-100 index recorded the intra-day high of 164,939.09 points and slipped to the low of 161,613.51 before finally settling at 161,805.02, down 3,791.05 points, or 2.29%. Heavy losses were witnessed across key sectors including commercial banks, oil and gas exploration, cement, auto assemblers, fertiliser, power generation and oil marketing, reflecting a broad-based risk aversion.

KTrade Securities' equity trader Ahmed Sheraz wrote that the KSE-100 closed down 3,791 points, as broad-based selling pressure dominated the session amid rising geopolitical and macro concerns. The downside was largely driven by heavy selling in banking, exploration & production, cement and other index-heavy sectors. Major laggards included OGDC, Engro Holdings, Meezan Bank, Pakistan Petroleum, UBL, Fauji Fertiliser, Hub Power, Lucky Cement, HBL and Bank AL Habib.

Investor sentiment weakened further after Trump's remarks regarding fears of escalating tensions in the Middle East. International oil prices opened sharply higher overnight and continued to hover around $110-111, raising concerns over Pakistan's inflation outlook and external account stability. On the macro side, Pakistan posted a $324 million current account deficit in April, while high oil prices and inflation worries kept investors wary of the interest rate outlook, Sheraz said.

According to Arif Habib Limited (AHL), the KSE-100 made an aggressive move lower in another strong Monday sell-off. Only nine shares rose while 91 fell with MCB (+0.54%), Sui Northern Gas Pipelines (+0.53%) and Colgate-Palmolive (+0.36%) contributing the most to the index gains. Oil & Gas Development Company (-3.54%), Engro Holdings (-2.72%) and Meezan Bank (-3.08%) were the biggest index drags.

In April 2026, a current account deficit of $324 million was recorded compared to a deficit of $12 million in April 2025 and a surplus of $1,134 million in March 2026. For 10MFY26, Pakistan posted a current account deficit of $252 million compared to a surplus of $1,662 million during the same period of last year.

Regionally, Iran said talks with the US continued and it had relayed its viewpoints to the Americans about the recent proposal. Global markets were, however, feeling the heat from rising US Treasury yields and Brent crude above $100. "Monday's decline of 2.29% sets up a run below 160k and sustained closures below will mitigate the potential to see 175k in the near term. Markets need some positive news flow about the US-Iran deadlock to see demand returning again," AHL said.

Overall trading volumes dropped to 499.8 million shares vs Friday's total of 625.5 million. The value of traded shares stood at Rs19.4 billion.

Shares of 487 companies were traded. Of these, 66 rose, 383 declined and 38 remained unchanged.