Equities gained ground on Monday as hopes of progress towards a US-Iran peace deal, lower international oil prices and positive IMF-related developments lifted investor sentiment.
The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index climbed to an intraday high of 171,519.26, gaining 3,675.02 points, or 2.2%, and a low of 170,377.63, reflecting a gain of 2,533.39 points, or 1.51%, from the previous close of 167,844.24.
"Market is looking to track back to previous levels due to declining oil prices and the potential end to the hostilities in the Middle East," said Ahfaz Mustafa, CEO of Ismail Iqbal Securities.
"The reaction would have been even more pronounced if investors were not cautious about the budget. The FY26/27 budget will be the new catalyst in the market once the oil prices stabilise," he added.
Ismail Iqbal Securities said it expected the market to post a positive session as the US and Iran appeared to be moving closer to a peace deal, while commodity markets were also reflecting improved sentiment, with oil prices falling to a two-week low.
On the economic front, the brokerage house said the IMF Executive Board had described Pakistan's overall performance on implementation of programme conditions as "exceptional" and turned down Indian propaganda about the use of loan proceeds, citing officials privy to board discussions held two weeks ago.
It said the government and retailers were also moving towards consensus on a proposed simplified fixed tax scheme for retailers, expected to be incorporated into the upcoming Finance Bill 2026-27 for retailers with turnover of up to Rs200 million.
Oil prices fell 6% to two-week lows on Monday as optimism grew that the United States and Iran were moving closer to a peace deal, even though they remained at odds over key issues, including the blockade on the Strait of Hormuz.
Brent crude futures fell $5.85, or 5.7%, to $97.69 a barrel by 0343 GMT, while US West Texas Intermediate stood at $90.85 a barrel, down $5.75, or 6%. Both contracts earlier touched their lowest levels since May 7.
On Saturday, US President Donald Trump said Washington and Tehran had "largely negotiated" an understanding on a peace deal that would reopen the Strait of Hormuz, which had carried a fifth of global oil and liquefied natural gas shipments before the conflict.
However, the two sides remain divided over several difficult issues, with Trump saying on Sunday he had told US negotiators "not to rush into a deal".
"The negotiations are proceeding in an orderly and constructive manner, and I have informed my representatives not to rush into a deal in that time is on our side," Trump wrote on Truth Social.
Iran's Tasnim news agency said key clauses of a possible agreement remained unresolved. One of the main sticking points is whether Tehran is willing to hand over its stockpile of highly enriched uranium.
The release of Iran's frozen assets held under longstanding US sanctions and whether Lebanon, repeatedly targeted by Israeli strikes, will be included in any peace deal are also among the key issues.
Markets across Asia climbed in early trade on hopes that Washington and Tehran would be able to overcome these hurdles. Tokyo soared more than 3%, while Shanghai inched higher. Taipei, Manila, Bangkok, Jakarta, Singapore, Sydney and Wellington also rose, while Kuala Lumpur slipped 0.1%. Hong Kong and Seoul were closed for public holidays.
In the previous session on Friday, the KSE-100 Index closed lower, shedding 670.2 points, or 0.4%, to settle at 167,844.25 against the previous close of 168,514.45.
Despite Friday's fall, the benchmark ended the week higher, gaining 2,248 points, or 1.4%, on a week-on-week basis.
