Investor optimism gave way to geopolitical alarm on Friday as the stock market retreated, shaken by reports of Israeli airstrikes on key Iranian military and nuclear sites that rippled across global markets.

“Early morning reports of an Israeli attack on Iran initially sent the equity market into a sharp decline, though some recovery has since been observed,” said Amreen Soorani, Head of Research at Al Meezan Investment.

“This event has significantly escalated geopolitical uncertainty, a sentiment clearly reflected in the immediate 8% surge in oil prices. Given evolving information, the broader market reaction in the coming days would be dominated by the extension and repercussion of the same.”

The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index touched an intraday high of 123,058.06, falling 1,035.06 points, or -0.83%, and dropped to a low of 121,604.59, reflecting a drop of 2,488.53 points, or -2.01%.

Israel confirmed it had carried out strikes on Iranian nuclear and military sites to block Tehran’s alleged pursuit of atomic weapons. The Israeli military said 200 jets were used to target approximately 100 locations, including sites in Tehran, Natanz, and northwest Iran.

Blasts were reported at a key Revolutionary Guard Corps facility and the Natanz uranium enrichment plant, with footage showing heavy smoke. The UN nuclear watchdog confirmed Natanz had been hit and stated it was monitoring radiation levels.

Iranian state media reported the deaths of two top military officials—Revolutionary Guards chief Hossein Salami and armed forces chief of staff Mohammad Bagheri—as well as injuries to at least 50 civilians. In response, Iran reportedly launched around 100 drones toward Israel, as confirmed by the Israeli military.

The strikes triggered a surge in global oil prices and weighed heavily on stock markets across the region, including Pakistan.

Separately, the State Bank of Pakistan (SBP) announced on Thursday it will hold its next Monetary Policy Committee (MPC) meeting on Monday (June 16) to determine the benchmark interest rate.

The previous session on Thursday saw the index retreat by 259.56 points, or 0.21%, to close at 124,093.12. It had surged to a record high of 126,718.28 earlier in the day before profit-taking pushed it down to a low of 123,846.56.