Daily Times

The capital market experienced a volatile session on Tuesday, with the KSE-100 Index briefly crossing the historic 117,000-point mark for the first time during early trading before succumbing to heavy profit-taking.

Investor sentiment remained mixed as early gains, driven by the State Bank of Pakistan’s (SBP) policy rate cut announcement yesterday and positive economic indicators, gave way to selling pressure later in the session. The Pakistan Stock Exchange’s (PSX) benchmark index climbed to an intraday high of 117,039.17, reflecting optimism in the morning session. However, profit-taking erased the gains, dragging the market to a low of 113,688.54. By the close, the KSE-100 Index had shed 1,308.73 points or 1.13% to close at 114,860.68.

“Some profit-taking is being witnessed today as the market has increased considerably,” said Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, reflecting investor sentiment after the recent surge.

The SBP’s decision to slash the policy rate by 200-basis point (bps) to 13% has sparked renewed interest in equities. The state bank’s decision marked its fifth consecutive rate cut, signalling an accommodative monetary stance to spur economic growth.

Separately, most Asian markets fell Tuesday as attention turned to the Federal Reserve’s upcoming policy decision, with traders hoping for guidance on its interest rate plans as president-elect Donald Trump prepares to take office.

The decision, which is expected to see officials lower borrowing costs again, comes in a busy week for central banks, with announcements in Japan and Britain also due.

Investors are keeping tabs on Beijing after Chinese leaders’ latest measures to kickstart the economy fell short of expectations, with weak retail sales data Monday reinforcing the need for more support.

The Fed is widely expected to lower rates for the third meeting in a row Wednesday as it looks to guide the world’s top economy to a soft landing, though its statement will be pored over for clues about next year’s outlook. Investors have started paring their bets on how many times it will cut over the next 12 months owing to still-sticky inflation, a strong labour market and uncertainty about Trump, who has pledged to slash taxes and impose tariffs on imports.

Stefan Hofrichter, head of global economics and strategy at Allianz GI, said the US economy had defied warnings of a recession and growth was expected to power ahead, adding the firm’s “base case scenario remains a ‘soft landing’ for the US and world economies”. However, he added: “The wild card is what happens after Donald Trump takes office as US president. The lavish spending he’s proposed could boost US growth in the short term.

“But the impact of the higher tariffs he’s mooted for US trading partners may also dampen the outlook for Europe. We need to wait to see the extent to which his election campaign promises become policy.”

Wall Street ended mostly on the front foot, with a surge in tech giants helping the Nasdaq to a record high, but Asia was unable to pick up the baton.

Tokyo, Hong Kong, Shanghai, Singapore, Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta all fell, though Sydney and Wellington rose. Bitcoin hit another record high of $107,791 on continued optimism that Trump will introduce measures to deregulate the cryptocurrency market.

The Fed rate decision will be followed Thursday by announcements in Japan and Britain. Opinion is split on whether the Bank of Japan will unveil a third hike of the year — having lifted in March for the first time in 17 years — as officials in Tokyo look to shift the country away from years of ultra-loose policies. Still, while the BoJ and Fed are on course to bring their rates closer together, the yen is struggling to strengthen and is stuck around 154 per dollar.