The Pakistan Stock Exchange (PSX) came under intense selling pressure on Friday, abruptly interrupting its recent historic bullish run as local investors moved to aggressively book profits. The domestic pullback was heavily influenced by a violent sell-off across global equity markets, where mounting concerns over tighter regulation of artificial intelligence (AI) following the United States midterm elections triggered widespread and systemic capital flight.
According to data available on the PSX, the benchmark KSE-100 Index opened on a distinctly weak note and extended its decline during the opening hour of trading. The index plummeted by more than 2,500 points to hit an intraday low of 172,809.89. However, the market subsequently recovered a portion of these early losses, with the index trading at 173,885.77 by midday, representing a decline of 1,494.09 points, or 0.85 per cent, from Thursday’s close of 175,379.87.
This sharp reversal stood in stark contrast to the euphoric session witnessed on Thursday, when the benchmark index surged by 3,366.38 points, supported by plunging international oil prices and initially optimistic investor sentiment regarding Middle Eastern de-escalation. Market analysts largely attributed Friday’s domestic equity decline to calculated profit-taking, as institutional investors sought to secure their massive recent gains ahead of an upcoming long weekend. Furthermore, persistent geopolitical ambiguity and a lack of concrete progress in ongoing regional peace negotiations provided local market participants with ample justification to maintain a cautious, risk-off stance.
The weakness in Pakistani equities perfectly mirrored a much broader, brutal retreat in international capital markets, particularly within the technology sector. Global investors rapidly reassessed their exposure to heavily capitalised AI investments following the Democratic Party’s sweeping gains in the US congressional elections. Widespread concerns that a newly empowered legislature could impose severe regulatory scrutiny on tech monopolies and heavily restrict the physical expansion of AI infrastructure—particularly energy-intensive data centres—prompted institutional funds to dump technology shares in favour of sovereign bonds and other defensive assets.
The epicentre of the financial earthquake was Wall Street, where the technology-heavy Nasdaq Composite plunged 5.5 per cent, recording its steepest single-day decline since April 2025. In a matter of hours, approximately $3 trillion was wiped off the market capitalisation of companies listed on the S&P 500. This ferocious sell-off pushed Wall Street’s volatility index sharply higher, signalling deep, structural uncertainty regarding the future profitability of generative AI and semiconductor supply chains.
The contagion immediately spread to Asian trading floors on Friday. Japan’s Nikkei index suffered a devastating 6 per cent collapse, its most severe one-day decline since the spring of 2025. Similarly, heavily tech-dependent stock markets in South Korea and Taiwan plunged by more than 8 per cent shortly after the opening bell before managing to pare back some of their most extreme losses as the session progressed.
This profound global market turmoil unfolded even as investors continued to grapple with the complex economic implications of the Middle East conflict. Oil markets remained highly volatile; despite expectations of a sharp weekly decline driven by hopes of a ceasefire in the Iran conflict, crude prices experienced a sudden intraday rebound. Brent crude futures for January delivery rose $1.29, or 1.31 per cent, to $99.58 per barrel in early Friday trading, briefly threatening the $100 psychological barrier. Meanwhile, US West Texas Intermediate (WTI) crude gained 86 cents, or 0.95 per cent, to reach $91.38 per barrel. For Pakistan, the dual pressures of a global tech rout and creeping energy prices threaten to complicate the central bank’s ongoing macroeconomic stabilisation efforts.