The Pakistan Stock Exchange (PSX) witnessed a dramatic recovery on Tuesday, with the benchmark KSE-100 Index soaring 3.96% (4,603 points) to close at 120,770.37, as news of a ceasefire between Iran and Israel lifted investor confidence. The rally followed Monday’s sharp 3.21% decline, with analysts attributing the rebound to easing geopolitical risks and a sharp drop in global oil prices.
Market experts said the de-escalation in Middle East tensions reassured investors, prompting a wave of buying. Ahfaz Mustafa, CEO of Ismail Iqbal Securities, noted, “The ceasefire and plunge in oil prices triggered today’s rally. Investors are regaining confidence as the threat of prolonged conflict fades.” The KSE-100 had earlier hit an intraday low of 120,369.53, still up 3.61% from the previous close.
The surge came after US President Donald Trump announced late Monday that Iran and Israel had agreed to a 12-hour ceasefire, signaling a potential end to hostilities. “It has been fully agreed… that there will be a Complete and Total CEASEFIRE,” Trump posted on Truth Social, adding that the war would be considered “ENDED” after the truce. He later expressed optimism for regional stability, stating Iran had “gotten it all out of their system” following its missile strike on a US base in Qatar.
Tuesday’s rally marked a stark reversal from Monday’s 3.21% drop, which saw the KSE-100 slump to 116,167.47 amid fears of escalating conflict. The ceasefire news not only calmed equity markets but also crushed oil prices, reducing pressure on Pakistan’s import-dependent economy. While the truce’s durability remains uncertain, the PSX’s bullish response highlights how quickly investor sentiment can shift with geopolitical developments. Analysts will now watch whether the ceasefire holds—and if the market rally sustains.