Bulls took control of the trading floor at the Pakistan Stock Exchange (PSX) on Monday, driving the shares up by over 800 points in intraday trading. By 1:54 pm, the benchmark KSE-100 index had risen by 815.22 points or 0.96%, reaching 86,065.31 points from the previous close of 85,250.09.
Mohammed Sohail, chief executive of Topline Securities, credited the market rally to a “reduction in political noise following the passage of the 26th Amendment,” which has buoyed investor sentiment.
The 26th Constitutional Amendment received the nod from both houses of Parliament earlier in the day, marking a significant political development. This weekend marked the second consecutive “working weekend” during which the ruling coalition secured a two-thirds majority in the Senate and the National Assembly for the crucial ‘Constitutional Package.’
Meanwhile, Asian markets presented a mixed response as traders assessed the impact of the Chinese central bank’s interest rate cuts aimed at stimulating the world’s second-largest economy. Despite a record-setting day on Wall Street last Friday, Asian markets started the week without uniform gains as they also prepared for the upcoming corporate earnings season.
The People’s Bank of China announced it had reduced two key interest rates to record lows to boost spending and meet the government’s 5% annual growth target. This action follows reports showing the economy grew at its slowest quarterly rate since early 2023, albeit better than expected.
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Last Friday’s economic figures were accompanied by better-than-expected increases in retail sales and industrial output for September, offering optimism amid generally lackluster economic indicators on inflation, investment, and trade.
In response to the sluggish economy, Beijing has introduced several measures to revitalise the economy, particularly the real estate sector. These include rate cuts, relaxed home-buying rules, and promises to bolster equity markets. While these announcements initially sparked a strong rally in mainland and Hong Kong stocks, the lack of detailed measures in subsequent announcements has tempered gains.
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Analysts at Moody’s Analytics commented, “Officials are gradually enhancing support to jump-start the economy, aiming to achieve the ‘around 5%’ growth target for the year. However, addressing the structural challenges in the economy will require more substantial efforts.”
Investor sentiment was boosted by Wall Street, where the Dow and the S&P 500 reached new highs, spurred by robust Netflix earnings and upbeat reports about Apple’s iPhone sales in China. Safe-haven gold prices peaked amid geopolitical tensions, and oil prices rebounded after a significant drop last week, reflecting ongoing economic uncertainties in China, the world’s largest oil importer.
