Shares at the Pakistan Stock Exchange (PSX) lost more than 350 points on Thursday due to escalating tensions between Iran and Pakistan.

According to the PSX website, the KSE-100 index lost around 1,038 points at 10:08 am. At 10:31am, the index climbed to 62,797.21. By 3:34pm, it recovered to 63,202.40, or 364.93 points below the previous close of 63,567.33.

Mohammed Sohail, chief executive of Topline Securities, attributed the sudden downward shift to the news of escalating Pakistan-Iran tensions.

Iran on Tuesday had laun­ched attacks in Pakistan targeting what it described as bases for the militant group Jaish al-Adl in the border town of Panjgur in Balochistan, Iranian state media reported, prompting strong condemnation from Islamabad and downgrading of diplomatic ties.

In a statement issued early morning today, Pakistan said it had struck terrorist hideouts in Iran’s Siestan-o-Baluchistan province.

Raza Jafri, head of equities at Intermarket Securities, said: “Border tensions with Iran seem to be affecting investor sentiment, offsetting positives on the external account such a healthy current account surplus and UAE’s debt rollover.”

He added, “If this Iran issue does not escalate further, the market should find some support especially as result season is near.”

Yousuf M. Farooq, director of research at Chase Securities, said: “The stock market responded unfavourably to Pakistan’s retaliatory attack on Iran and concerns of potential escalation.”

However, he added that the market has experienced a modest recovery from the low of 1,038 points. The recovery was supported by robust current account numbers, the rollover of debt from the UAE, and a tranche release by the International Monetary Fund (IMF).

He said that investors anticipate a diplomatic resolution to the issue, and a 1pc decline on the downside is not indicative of panic among investors “at least in the first hour of trading”.

Pakistan international bonds fall more than 1 cent

Meanwhile, the country’s international bonds fell after the foreign ministry said it conducted strikes inside Iran, two days after Tehran said it had attacked the bases of a group within Pakistani territory.

The 2026 bond suffered some of the biggest declines, dropping 1.2 cents to trade at 71.125 cents in the dollar, data from Tradeweb showed.

Additional information from Reuters