Middle East volatility and unresolved US-Iran disagreements over the Strait of Hormuz pushed the Pakistan Stock Exchange into a second straight losing session, with the benchmark KSE-100 index closing lower despite a strong start. Main Developments Monday's session opened with optimism, as the KSE-100 index climbed to an intraday high of 182,347.51, up 917 points, according to Topline Securities Ltd. Early buying interest quickly faded, however, and profit-taking dragged the index to an intraday low of 180,820.23, a decline of 609 points. The index eventually settled at 181,310.28, down 119.74 points or 0.07 per cent. Ali Najib, Deputy Head of Trading at Arif Habib Ltd, described the session as range-bound, with the index closing on a flat note. Read also: 5 risks as World Bank flags Balochistan housing fund diversion Refinery stocks outperformed the broader market, with Attock Refinery Ltd, Pakistan Refinery Ltd, National Refinery Ltd, and Cnergyico PK all closing in positive territory. Investor participation improved, as trading volume rose 28.10 per cent to 917.26 million shares, while total turnover surged 31.38 per cent to Rs44.8 billion. Background The latest decline extends the weekend's sluggishness, which had already left the index in negative territory. The core driver remains geopolitical uncertainty in the Middle East, where a US-Iran deal on the Strait of Hormuz appears distant, keeping crude oil prices elevated and markets on edge. On the corporate front, Lucky Cement reported fiscal year 2026 earnings per share of Rs60.78, up 16 per cent year-on-year, with a dividend of Rs5 per share, supported by strong domestic cement demand. Macroeconomic data also showed remittances rising 13 per cent year-on-year to $3.6 billion in July, compared with $3.2 billion in the same month last year, and up 5 per cent month-on-month. Why It Matters The index's inability to hold gains highlights how external factors can outweigh domestic positives. Even with robust corporate earnings and record remittances, geopolitical jitters over the Strait of Hormuz—a critical oil shipping lane—continue to inject volatility into the market, affecting investor confidence and portfolio decisions. Selective profit-taking erased significant gains, with Hub Power, Fauji Fertiliser, United Bank, Mari Energies, and Lucky Cement collectively removing 791 points from the index. In contrast, Pakistan Petroleum, Attock Refinery, Meezan Bank, Oil and Gas Development Company, and Engro Holdings added 574 points, illustrating the market's mixed sentiment. What's Next Analysts expect strong corporate earnings, robust remittances, and improving macro fundamentals to keep the broader sentiment constructive. Sustained foreign flows and positive corporate results could provide a catalyst for the index to resume its upward trajectory, but much depends on whether geopolitical tensions ease in the coming sessions.