The Pakistan stock market on 07 March shed 1500 points in an intraday trading. The market opened trade at 44,419.1 points, and by midday, it had plummeted to 43,050.1 points. It currently stands at around 43,286.1, after dropping 2.84 percent in value. On the other hand, oil prices also soared in the international market.
It was last trading at around $115 per barrel on Friday. However, the prices soared by $15, marking a 14 year high, currently trading at about $140 per barrel. This is the highest oil prices have soared since the oil crisis of 2008, during which the oil per barrel was traded at around $145.
The current increase in the price of oil marks a nine percent increase in the oil prices, and many market analysts speculate that the current market crash of 1500 points might be a direct consequence of the uncertainty and the unpredictability in the international market because of Russia Ukraine crisis.
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BMA Capital Executive Director Saad Hashemy said that the market was primarily down because of rising oil prices in the global market. The local bourse was under severe selling pressure from the moment the market opened, and it lost 514 points in the first ten minutes of the market opening.
The U.S and the E.U have imposed sanctions on Russia because of its Ukraine invasion. As the West mulls over a Russian oil import ban, uncertainty lingers, sending the market into a panic. Russia caters to 40 percent of the energy needs of Europe and produces around 11 million barrels per day of crude oil.
Oil prices touching new highs, political uncertainty at it's peak and stock market is 1500 points down!
— Economy of Pakistan (@Pakistanomy) March 7, 2022
If the West sanctions Russia’s oil imports, it will create a huge demand gap, further exacerbating the oil crisis. Meanwhile, gold prices touched $2,000 per oz for the first time in a year and a half, as investors rushed to the safety of the metal following the escalating Russia-Ukraine crisis.
Moreover, the news of the opposition marching towards the capital against the rising inflation in the country also contributed negatively to the stock market. Pakistan Peoples Party (PPP) chairman Bilawal Bhutto-Zardari embarked on a protest from Karachi and is expected to reach the capital tomorrow (08 March).
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Prime Minister Imran Khan recently announced a decrease of Rs. 10 in petrol prices, but following the current trajectory of the oil prices in the international market, many believe that in the following fortnightly review, the government would have no other choice but to increase the petrol prices.