The bourse came under heavy selling pressure on Monday as worsening Middle East tensions and rising oil prices rattled sentiment.
The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index settled at 179,927.04, down 2,314.73 points, or 1.27%, from the previous close of 182,241.77.
During the session, it touched an intraday low of 179,448.52, down 2,793.25 points, or 1.53%, while its intraday high stood at 181,148.26, still down 1,093.51 points, or 0.6%.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, said the PSX slid more than 1% because of Iran escalation and worsening Middle East tensions.
Mehanti said investor fears over inflation amid a surge in global crude oil prices and the potential impact on Pakistan's external account played a catalyst role in the selling pressure.
"The market opened lower as renewed US-Iran hostilities drove oil prices higher, prompting investors to adopt a cautious stance. Despite the prevailing geopolitical uncertainty, support emerged at lower levels in anticipation of renewed diplomatic negotiations once the escalation subsides," Huzaifa Riaz, Director at Mayari Securities (Pvt) Limited, told Geo.tv.
Ismail Iqbal Securities also expected the market to remain under pressure as geopolitical tensions continued to escalate alongside rising oil prices.
"Sentiment is likely to remain sensitive to any fresh developments on the geopolitical and macroeconomic fronts," the brokerage said.
Oil prices jumped more than 4% on Monday after another flare-up between the United States and Iran threatened their already fragile truce.
The escalation came as negotiators struggled to reach a lasting peace deal to keep the Strait of Hormuz open, after last week's exchange of fire and renewed fighting over the waterway.
The US military launched a new wave of strikes on Sunday after several of Washington's Gulf allies were targeted by incoming fire.
Both main oil contracts spiked as much as 4.5%, fanning fresh concerns that higher energy prices could keep inflation elevated and pressure central banks to raise interest rates.
The renewed fighting followed an Iranian attack early Sunday on a commercial ship in the strait, with the crew forced to abandon it after it caught fire.
Iran's Revolutionary Guards said after the incident that "the Strait of Hormuz will be closed until further notice and until the end of American interventions in this region," according to state news agency IRNA.
United States Central Command, however, said on X that the strait was “open to all vessels seeking to lawfully transit”.
US officials said around 20 vessels had been escorted through the strait in the previous 24 hours, though ship-tracking sites showed little traffic moving.
