Karachi: PSX KSE-100 rebounded sharply on Wednesday, climbing more than 2,500 points in early trading to end a two-day losing streak as investors returned to the market after heavy selling in the previous session.

The benchmark KSE-100 Index jumped 3,133 points to 176,651.81 shortly after the market opened. By 10:14am, the index had trimmed some gains but remained higher by 2,664.88 points.

Analysts attributed the rally to value buying after Tuesday’s steep decline, when investors sold stocks amid concerns over rising geopolitical tensions and higher global oil prices.

Mettis Global said investors took advantage of lower share prices following the previous session’s sharp losses, helping the market recover.

Awais Ashraf, Director of Research at AKD Securities, said investor confidence improved after US President Donald Trump dropped a proposed 20% toll on ships using the Strait of Hormuz in favour of investment commitments from Gulf Cooperation Council (GCC) countries.

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He also said lower-than-expected US inflation eased concerns about further interest rate increases by the Federal Reserve, improving prospects for capital inflows into frontier markets and reducing pressure on the Pakistani rupee.

Despite the gains in Karachi, global oil prices continued to rise after the United States reimposed a naval blockade on Iranian ports and Tehran launched attacks targeting US infrastructure in the region.

Brent crude futures rose 99 cents, or 1.2%, to $85.72 a barrel, while US West Texas Intermediate crude gained 64 cents, or 0.8%, to $79.98 a barrel.

On Tuesday, the PSX suffered one of its sharpest declines in recent weeks, with the benchmark index falling below the 174,000-point level. Investors wiped out an estimated Rs706 billion in market value as fears over escalating Middle East tensions triggered widespread selling.

Market sentiment improved after Trump later withdrew the proposed shipping levy and said the Strait of Hormuz would remain open to international shipping, except for Iranian vessels.