The Pakistan Stock Exchange (PSX) witnessed a strong rebound on Friday, with the benchmark KSE-100 Index gaining more than 2,800 points in early trading, driven by optimism over easing geopolitical tensions and positive cues from international markets.

By 10:45am, the index had surged to 114,183.67 — an increase of 2,857.10 points or 2.57 per cent — marking one of the strongest single-day recoveries in recent weeks.

Widespread buying activity was observed across major sectors including automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, oil marketing companies, power generation, and refineries. Index-heavy stocks such as OGDC, PPL, PSO, MARI, HUBCO, HBL, and NBP all traded in the green.

The Pahalgam attack

The rally follows a steep downturn earlier this week, triggered by heightened tensions between Pakistan and India after a militant attack in Indian-occupied Jammu and Kashmir (IIOJK). However, a statement by US Secretary of State Marco Rubio urging both countries to de-escalate the situation appears to have improved investor sentiment.

Expectations of a cut in interest rates by the Monetary Policy Committee (MPC) in its upcoming meeting also buoyed market confidence. Additionally, inflation figures expected later in the day are forecast to remain below 0.5 per cent, further supporting hopes of monetary easing.

Global market

Global market trends also played a key role in lifting investor sentiment. Asian stock markets posted gains, while US futures reversed earlier losses following comments from China’s commerce ministry that suggested Washington is open to renewed trade talks. Japan’s Nikkei rose 1 per cent and Taiwan’s benchmark index surged 2 per cent.

In commodities, oil prices continued their upward trajectory after former US President Donald Trump threatened secondary sanctions on Iran. Brent crude futures rose 0.56 per cent, and US West Texas Intermediate (WTI) gained 0.6 per cent.

Gold prices, meanwhile, slipped to $3,234.9 per ounce, heading for their weakest weekly performance in two months amid declining demand for safe-haven assets.

The KSE-100 Index not only recovered but also crossed key psychological levels, briefly touching 114,242 — up by 2,917 points — before stabilising slightly. The swift restoration of the 112,000, 113,000, and 114,000 levels signaled renewed investor confidence after a period of uncertainty.

Market participants, however, remain cautious, noting that the sustainability of the rally will depend on how geopolitical and economic developments unfold in the coming days.