Geopolitical shocks rippled through Pakistan's capital markets on Thursday, sending the benchmark KSE-100 index on a volatile ride that briefly pierced the 175,000-point threshold. With crude prices climbing and Middle East tensions flaring, investors are recalibrating risk in real time, even as some blue-chip earnings beat expectations. Main Developments The PSX logged its third consecutive losing session as anxiety over fresh US-Iran attacks overshadowed corporate results. The index tumbled to an intraday low of 174,612.15—down 1,430 points—before clawing back to close at 175,547, a 495-point or 0.28% decline. Heavyweights led the sell-off, with Engro Holdings, Lucky Cement, Systems Ltd, Hub Power, and Pakistan Petroleum collectively wiping out about 547 points from the index. Despite the partial recovery, buying interest remained thin as uncertainty over the geopolitical outlook persisted. Read also: 2 fuel price shifts in 1 day: Pakistan's new daily pricing explained Trading activity surged, with volumes jumping 23.88% to 711 million shares and traded value reaching Rs25.3 billion. Trust Brokerage emerged as the most active player, handling nearly 143 million shares. Background Investor sentiment has been fragile since the escalation of US-Iran hostilities, which has reignited fears of supply disruptions in the Strait of Hormuz—a critical chokepoint for global oil shipments. Higher crude prices typically stoke inflationary pressures in Pakistan, a net importer of energy. In this climate, earnings season has delivered mixed signals. Engro Fertiliser posted a 32% year-on-year drop in second-quarter profit to Rs3.8 billion (EPS: Rs2.85), citing weaker fertiliser offtake. The company slashed its cash dividend to Rs1.75 per share from Rs4.25 a year earlier, reflecting a more cautious approach to capital allocation. Conversely, Bank Alfalah reported a 40% jump in first-half earnings to Rs21 billion (EPS: Rs3.22 for the quarter), and announced an interim dividend of Rs1.5 per share, underscoring resilience in the banking sector despite the broader market turmoil. Why It Matters The sustained bearishness signals that investors are bracing for a prolonged period of geopolitical uncertainty, which could weigh on economic stability and corporate profitability. Rising oil prices threaten to widen Pakistan's trade deficit and fuel domestic inflation, complicating the central bank's policy decisions. The divergence in corporate performance—banks thriving while fertiliser makers struggle—highlights the uneven impact of external shocks across sectors, making stock selection critical in the current environment. What's Next Markets are now fixated on the progress of US-Iran negotiations, particularly regarding the Strait of Hormuz, as reported by media. Any breakthrough could trigger a sharp rebound in equities, while further escalation may deepen the sell-off. Investors will also monitor upcoming earnings releases and dividend announcements to gauge the health of other key sectors. With volumes already elevated, a clear directional cue from the diplomatic front could set the tone for the next trading sessions.