The Pakistan Stock Exchange (PSX) witnessed a powerful rally on Monday, with the benchmark KSE-100 Index surging by more than 4,300 points in early trading as investors welcomed the reported peace agreement between the United States and Iran.

By 9:35am, the benchmark index had climbed to 176,767.01 points, reflecting a gain of 4,367.11 points, or 2.53%, as strong buying activity emerged across major sectors of the market.

Investor sentiment improved significantly following reports that Washington and Tehran had reached an agreement aimed at ending months of conflict, easing concerns over regional instability and potential disruptions to global energy supplies. The development also triggered a sharp decline in international oil prices, further supporting risk appetite across financial markets.

The rally at the PSX was broad-based, with buying observed in commercial banks, fertiliser manufacturers, cement producers, oil and gas exploration companies, oil marketing companies, and refinery stocks. Major index contributors including DG Khan Cement, Lucky Cement, Habib Bank, MCB Bank, Meezan Bank, Mari Energies, OGDC, PPL, POL, and Hub Power traded firmly in positive territory.

The strong start follows a positive performance in the previous week, when the KSE-100 Index gained 1.13% despite heightened volatility. Improved expectations surrounding geopolitical developments and lower global oil prices helped the market recover from levels below 170,000 points and close the week at 172,399.90 points.

Global financial markets also responded positively to the prospect of peace in the Middle East. Asian equities advanced while oil prices declined sharply as investors anticipated lower inflationary pressures and reduced risks to global economic growth.

Brent crude fell nearly 4% to around $83.8 per barrel, while US crude dropped approximately 4.7% to $80.9 per barrel. The decline in oil prices is particularly favorable for Pakistan, as lower import costs can ease pressure on the country's inflation outlook, current account balance, and energy bill.

Market participants believe the easing of geopolitical tensions could provide further support to investor confidence, with lower commodity prices and improved external stability creating a more constructive environment for equities in the near term.