Bears continued to rule the Pakistan Stock Exchange (PSX) for the secon successive day on Friday.

The fifth and last day of the business week saw a sharp bearish trend in the PSX with the KSE-100 index trading at 77,938 points after declining 530 points.

A day earlier, the stock market saw a 927 points decline and closed at 78,469 points.

Experts saw the stock market’s “across-the-board downturn” a result of political uncertainty.

They are of the opinion that investor concerns about a settlement of $15 billion due to Chinese IPPs, a surging power tariff impacting industrial earnings, political wrangling over ban on opposition, and a weak rupee led to fall.

US DOLLAR

Meanwhile, there has been a decrease in the value of the US dollar to Pak rupee in the interbank trade.

The US currency depreciated by 6 paisa to Rs278.35. 

The yen stabilized near a 12-week high against the dollar on Friday while Asia-Pacific equity markets found their feet, a day after their worst session since mid-April.

MSCI’s broadest index of Asia-Pacific shares was just 0.06% lower on Friday, following a 1.88% tumble the previous day.

Much of the weakness emanated from Taiwan, which reopened from a two-day closure due to a typhoon to slump 3.53% as the tech-heavy equity index TWII caught up with the rout in the rest of the world since mid-week.

Japan’s Nikkei eased 0.12% after failing to sustain earlier gains, but Australia’s benchmark AXJO added 0.79% and South Korea’s Kospi gained 0.89%.

Hong Kong’s Hang Seng rose 0.21% while mainland blue chips were flat.

US stock futures pointed higher after two days of selling in the cash indexes, with S&P 500 futures rising 0.43% and Nasdaq futures advancing 0.53%.

Pan-European Stoxx 50 futures added 0.17%.

US economic data from overnight gave some cause for optimism, with economic growth faster than expected in the second quarter and inflation cooling. That helped dispel worries that the expansion was in danger of an abrupt end, while also supporting wagers for a Federal Reserve interest rate cut in September.

Friday’s release of the PCE deflator, one of the Fed’s preferred price gauges, will be “the next test, and arguably climax to the week’s trade”, said Kyle Rodda, a senior market analyst at Capital.com.

“There are concerns about upside risk to the current consensus estimate for the PCE Index,” Rodda said.

“While a modest upside surprise wouldn’t necessarily derail the path back to the target of inflation, it could impact the expected timing of the first (Fed) cut and the number of cuts that could come over the next six months. That could rattle the markets at a time when sentiment is already a little cautious.”

YEN UP 2.5% VS DOLLAR THIS WEEK

Safe-haven demand for the yen cooled overnight, and an unwinding of long-held bearish bets lost steam after the Japanese currency gained some 2.5% this week against the dollar, putting it on track for its best performance since late April.

The dollar last traded 0.19% lower at 153.67 yen, after dropping as low as 151.945 on Thursday for the first time since May 3, and then springing back by the end of the trading day.

The area between 152 and 151.80 has proved to be “a brick wall of demand,” said IG analyst Tony Sycamore.

“We continue to expect this support level to hold, with a squeeze back toward 155.30ish not out of the question ahead of Wednesday’s Bank of Japan meeting,” Sycamore said. “After that, all bets are off.”

The BOJ and the Federal Reserve both announce policy decisions on July 31.

The rate futures market has priced in a 67.2% chance that Japan’s central bank will raise rates by 10 basis points (bps), up from a 40% chance earlier in the week, according to LSEG estimates.

Markets see only a slight chance for a Fed rate cut of at least 25 bps next week, but are fully pricing in a September reduction, according to CME’s FedWatch Tool.

US two-year Treasury yields eased slightly in Asian hours to 4.4348% but were well off the overnight low of 4.34%, a level last seen in early February.

The 10-year yield was down slightly at 4.2445%.

Elsewhere in currency markets, the euro rose 0.13% to $1.0857 and sterling added 0.11% for $1.2864.

Oil prices rose slightly as the stronger-than-expected US economic data raised expectations for increased crude demand from the world’s largest energy consumer.

Brent crude futures for September rose 12 cents to $82.49 a barrel. US West Texas Intermediate crude for September increased 13 cents to $78.41 per barrel. 

Mercedes-Benz on Friday narrowed its annual profit margin forecast for its core car division as the German luxury automaker faces fierce competition in China, though new models should lift sales in the second half of the year.

The company said it now expected an adjusted return on sales in the range of 10-11% this year, down from its previous target range of 10-12%.

Mercedes’ cars division achieved a 10.2% return on sales in the second quarter, while its adjusted earnings came in below analyst expectations.

Mercedes reported a 6% drop in sales in the first half, with electric vehicle sales falling 17%.

Mercedes said the economic outlook was marked by uncertainty, adding that it saw improving market sentiment in Europe and “solid momentum” for sales and demand in the US market.

The automaker said, however, it had a “cautious view” on China, where it expected strong competition in its entry-level and core model segments, while it “seeks to successfully defend its leading position” of its top-end car models.

“Sales and the model mix are expected to improve in the second half of the year, supported by further market launches of new models particularly in the Top-End segment,” CEO Ola Kaellenius said in a statement.

German automakers are struggling with lacklustre demand for electric vehicles, coupled with tough local competition in China, supply bottlenecks and persistently high interest rates.

The group reported a 27.5% fall in adjusted earnings in its car division in the second quarter, against LSEG’s estimate of a 26% decline.

At group level, earnings before interest and taxes (EBIT) dropped in the quarter by 19.1% in line with LSEG’s consensus.