The stock market slipped on Thursday as Iran's stance raised fresh doubts about de-escalation in the Middle East, prompting investors to trim exposure after Wednesday’s sharp rally.
"It's the negative sentiment that the peace proposal is rejected by Iran, signalling continued hostility," said AAH Soomro, an independent investment and economic analyst.
"It's a pure sentiment-driven market thus far. Economy is edgy but nudging forward," he added.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 152,907.96 points, down 5,405.48 points, or 3.41%, from the previous close of 158,313.44.
The index traded between a high of 157,591.23, down 722.21 points, or 0.47%, and a low of 153,405.76, down 4,907.68 points, or 3.1%.
Oil prices steadied this week as investors still held out hope for a deal, with Brent just above $100 and WTI around $90, though the virtual closure of the Strait of Hormuz, through which around 20% of global oil and gas passes, continued to cast a shadow over markets.
Stocks in Wall Street and Europe rose but Asian markets struggled after a two-day rally.
Tokyo, Hong Kong, Shanghai, Seoul, Sydney, Taipei, Singapore, Manila, Bangkok and Jakarta fell along with London, Paris and Frankfurt.
Markets had found support since late Monday after US President Donald Trump backed away from a threat to destroy Iran's energy infrastructure and said the two sides were in peace talks. Washington has presented a 15-point plan to end the war, while Iran's state-run television reported officials had put forward five conditions for hostilities to end.
Trump on Wednesday threatened to "unleash hell" if Iran did not strike a deal, though he also said Iran was taking part in peace talks, while Foreign Minister Abbas Araghchi said Iran did not intend to negotiate.
In the previous session on Wednesday, the KSE-100 surged 4,347.08 points, or 2.82%, to close at 158,313.44 from 153,966.36. The index touched an intraday high of 158,586.09 and a low of 155,199.71.
