Profit-Taking Drags Down PSX, Erases Intra-Day Gains

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The Pakistani rupee remained largely stable against the US dollar, appreciating 0.03% during the opening hours of trading in the inter-bank market on Wednesday. At 10:20am, the currency was hovering at 277.65, a gain of Re0.09 against the greenback. On Tuesday, the rupee had settled at 277.74, according to the State Bank of Pakistan (SBP). Internationally, the US dollar hovered close to a three-month peak on Wednesday in a big week for macroeconomic data that could reveal the path for US monetary policy. The Australian dollar edged closer to a three-month trough after some stickiness in inflation suggested a Reserve Bank of Australia interest rate cut is unlikely this year. Mixed US indicators overnight, showing a loosening US jobs market but a confident consumer, provided little clarity on the outlook for Federal Reserve easing, allowing the greenback to drift lower with Treasury yields on Tuesday following a strong seven-year note auction. Recently though, economic readings have pointed to a resilient economy, particularly for employment, spurring a paring back of bets on the pace of rate reductions. The US dollar index, which measures the currency against six major rivals including the yen and euro, was little changed at 104.24, after reaching the highest since July 30 at 104.63 on Tuesday before finishing the day almost flat. Oil prices, a key indicator of currency parity, stabilised on Wednesday on industry data showing a surprise drop in US crude and gasoline inventories, following two previous sessions of losses on the prospect of hostilities easing in the Middle East. Brent crude futures gained 21 cents, or 0.3%, to $71.33 a barrel by 0002 GMT. US West Texas Intermediate crude futures rose 22 cents, or 0.3%, to $67.43 per barrel. US crude oil and fuel stocks fell last week, market sources said on Tuesday, citing American Petroleum Institute figures. Crude stocks dipped by 573,000 barrels in the week ended October 25, the sources said on condition of anonymity. Gasoline inventories lost 282,000 barrels, and distillate stocks fell by 1.46 million barrels, the sources said.

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The Pakistan Stock Exchange (PSX), on Wednesday, experienced a sharp downturn as profit-taking erased all intra-day gains, pushing stocks into negative territory. The benchmark KSE-100 Index, which had surged to new highs earlier, fell back under selling pressure as investors cashed in on recent gains.

KSE-100 Index Slips After Scaling New Highs

At 2:55 pm, the KSE-100 Index was recorded at 90,182.16 points, representing a decrease of 681.93 points or 0.75%. Earlier in the day, the index reached an intra-day peak of 91,872.63 points before profit-taking began, reversing the positive momentum.

Despite the downturn, the day initially saw robust buying interest in sectors such as automobile assemblers, cement, chemicals, commercial banks, fertilizer, power generation, oil and gas exploration companies, and OMCs. High-performing stocks included index-heavyweights like HUBCO, OGDC, PPL, MCB, HBL, and MEBL, all of which traded positively in early hours.

Bullish Sentiment Driven by Corporate Results and Rate Cut Speculation
The PSX has shown strong bullish momentum in recent weeks, a trend experts attribute to robust corporate earnings that have boosted investor confidence. The anticipation of a potential policy rate cut by Pakistan’s central bank’s Monetary Policy Committee (MPC), set to meet next week, has further supported the ongoing rally. Many market analysts believe a rate cut could enhance liquidity and boost investor sentiment.

Correction Expected After Series of Record Highs

On Tuesday, the PSX continued its upward trajectory, with the KSE-100 Index climbing 668.57 points (0.74%) to close at a record high of 90,864.09 points. However, market observers had noted that a correction was likely, as the index has consistently hit new peaks with nearly every session.

Global Market Influence and US Election Jitters

Globally, Asian shares saw a downturn on Wednesday, influenced by weakness in Chinese markets as investors brace for the outcome of a tightly contested US presidential election. Analysts believe the election’s results could have significant consequences for the world’s second-largest economy. In an effort to stabilize growth, Beijing has been implementing measures to counter the impact of global economic uncertainties.

Gold and Bitcoin See Surge Amid Election Concerns

Meanwhile, gold prices rose to a record high as concerns over the US election spurred demand for safe-haven assets. Bitcoin also approached record levels, trading at $72,322.08, just shy of its peak of $73,803.25. Investors believe a victory for Republican candidate Donald Trump could benefit the cryptocurrency market, given his perceived favorable stance towards digital assets.

In early trading, MSCI’s broad index of Asia-Pacific shares (excluding Japan) declined by 0.22%, while Chinese markets also reflected investor caution in light of the impending US election results. The situation is expected to remain dynamic as both local and global factors continue to influence market trends.