KSE-100 sheds 469 points, rupee loses 68 paisa against US dollar
However, investors' confidence was restored in the last two sessions as the ECC.
KARACHI (Dunya News) – The Pakistan Stock Exchange (PSX) benchmark KSE-100 index sheds 469 points on Monday, in a bearish trajectory, and slipped to 35,505 points in intra-day trade.
The analysts have been speculating that the reason behind the downward trading trend is the possible imposition of new taxes in the upcoming budget and the drops in crude oil prices, which have resulted in a decline in the value of shares of the energy sector.
In the previous week, stock market remained highly volatile in the four trading sessions of the outgoing week and closed at 35,975 points with a gain of 0.8% or 270 points.
The previous week had commenced on a negative note because of profit-booking and a lack of clarity on creation of a market support fund, which remained in the limelight in the past two weeks.
However, investors’ confidence was restored in the last two sessions as the Economic Coordination Committee (ECC) on Thursday approved a Rs20-billion support fund.
The meeting was presided over by Adviser on Finance Abdul Hafeez Shaikh.
According to Dunya News, State Enterprises Fund and Equity Market Fund would support market, whereas the National Investment Trust would manage the funds.
Sources said that the market support funds have been established for three years and the State Enterprises Fund would be used only to purchase shares of government institutions, while the Equity Market Fund would be utilised for sale and purchase of private companies.
The shares purchased through the funds would be sold at suitable time. The National Bank of Pakistan (NBP), State Life, EOBI and the National Insurance Company will invest in the market.
On the other hand, the value of the US dollar in the interbank gained 68 paisa, and lost 20 paisa in the open market on Monday.
The new rate of greenback in the open market was Rs148.80, and Rs148.60 in the interbank.
Oil prices fall as trade wars fan fears of economic slowdown
Oil prices fell by around 1% on Monday, extending losses of over 3% from Friday, when crude markets slipped to their biggest monthly losses in six months amid stalling demand and as trade wars fanned fears of a global economic slowdown.
Front-month Brent crude futures were at $61.28 at 0659 GMT. That was 71 cents, or 1.1%, below Friday’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $53.09 per barrel, down 41 cents, or 0.8%, from their last settlement.
The drops followed price slumps of more than 3% on Friday, which made May the worst-performing month for crude futures since last November.
“Oil prices slid on fresh trade worries after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, which is one of the largest U.S. trade partners and a major supplier of crude oil,” Mithun Fernando, investment analyst at Australia’s Rivkin Securities, said in a note on Monday.
In a typical move for financial markets during times of uncertainty, gold on Monday rose to its highest level in over two months as investors pulled out of risky assets like oil and parked money in perceived safe havens like the precious metal.
“Traders are increasingly pricing in a prolonged trade war hitting the global economy,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
“The U.S.-China feud remains most critical to the global growth outlook, but the addition of trade tensions between the U.S. and Mexico raised the slower demand picture for the Americas,” said Edward Moya, senior market analyst at OANDA, another futures brokerage.
Barclays bank said in a note published last Friday that U.S. March oil consumption “declined significantly year-on-year for the first time since September 2017 ...(as) petroleum demand fell almost 370,000 barrels per day (bpd) year-on-year on weak consumption across the barrel.”
