Global Trade Tensions and Pakistan Financial Market
By Newztodays Team
Islamabad – Rising global trade tensions and slowing economic indicators are going to create a cautious outlook for Pakistan’s financial market.
Unpredictable U.S. tariffs have rattled global equities. And, they may lead to foreign outflows from the Pakistan Stock Exchange (PSX), especially in export-oriented sectors like textiles and energy.
At the same time, falling global oil prices have offered short-term relief. Brent crude has dropped to $64.08 per barrel to ease Pakistan’s import bill, lower inflation, and back the current account. However, reduced petroleum levy collections may hit the government’s revenues. Lower oil prices could also hurt earnings in the local energy sector.
The weakening U.S. dollar following rumours of further Federal Reserve rate cuts may stabilize the Pakistani rupee to ease imported inflation and reduce external debt servicing costs.
Global financial markets witnessed a cautious undertone on Wednesday as anxieties surrounded international trade dynamics and the trajectory of economic growth intensified.
Equity markets have displayed a lack of clear direction. The price of oil faced a notable downturn, and the primary catalyst for this apprehension appeared to be the unpredictable trade policies U.S. President Donald Trump has enacted.
Foundation Securities, in a report, said that the tariffs imposed by Trump had negatively impacted the outlook of corporations.
They contributed to the persistence of weak bond yields that have been at the lowest levels in several weeks. This environment has also spurred investors to increasingly anticipate further monetary easing measures from the Federal Reserve. They are meant to back the world’s largest economy.
The U.S. dollar maintained a steady position on Wednesday and was on track for its weakest monthly performance since November 2022.
President Trump’s inconsistent trade actions have made the greenback vulnerable and provided upward momentum to currencies such as the euro, yen, and Swiss franc.
There have been several instances when the White House has partially retreated from previous tariff measures.
But the initial disruption to the global stock market in early April has continued to have repercussions and prompted investors to seek safer investment havens outside of the traditionally favored U.S. dollar.
Oil prices also felt the negative impact of these trade-related concerns. They edged lower during early trading in Asia. The uncertainty surrounded the strength of global economic expansion and the potential for reduced fuel demand, which stemmed from the imposition of tariffs and exerted downward pressure on crude futures.
Specifically, Brent crude futures have faced a decline of 0.26% to $64.08 per barrel. While U.S. West Texas Intermediate crude had dropped by 0.2% to $60.3 a barrel. Notably, both of these benchmark prices have reached their lowest closing levels since April 10th.
In the U.S. equity markets, futures contracts have indicated a slight dip in the evening in the wake of a modest recovery on Wall Street earlier in the week.
This was partly attributed to some easing of trade tensions. Investors were now keen to awaiting upcoming releases of key economic data and corporate earnings reports to gain further clarity on the prevailing economic conditions.
As of 20:03 ET (00:03 GMT), S&P 500 futures had declined by 0.2% to 5,571.75 points, and Nasdaq 100 futures had dropped by 0.4% to 19,561.75 points. In contrast, Dow Jones futures have remained unchanged at 40,653.0 points.
On April 30, 2025, a series of significant economic indicators is going to be released. These included the API Weekly Statistical Bulletin and a public address by President Trump.
Both are denominated in USD and carry high market impact. Japan is set to release preliminary data on industrial production (month-over-month), which a forecasted to decrease by 0.50% against the previous increase of 2.30%.SEOs board
Retail sales (year-over-year) are forecasted with an increase of 3.60% against the previous 1.30%. Housing starts (year-over-year) have been forecasted an increase by 0.90% against the previous 2.40%. New Zealand’s ANZ Business Confidence index is also being closely monitored, with the previous reading at 57.5.