Karachi Stock Exchange dips amid rate cut and tensions

The Pakistan Stock Exchange (PSX) experienced a volatile trading session on May 6, 2025. The benchmark KSE-100 index surged nearly 990 points in early trading, reaching an intraday high of 115,093.10, buoyed by the State Bank of Pakistan's (SBP) unexpected 100 basis point interest rate cut to 11 per cent. However, the initial enthusiasm waned as profit-taking and geopolitical concerns led to a reversal, with the index closing at 113,568.51, down 533.73 points or 0.47 per cent. What's driving the market movements? Interest rate cut surprises investors The SBP's decision to reduce the policy rate by 100 basis points was more aggressive than the market's expectation of a 50 basis point cut. This move initially sparked optimism, as lower interest rates can reduce borrowing costs and stimulate economic activity. Geopolitical tensions weigh heavily Despite the mon