Pakistan stocks see historic drop amid global sell-off

Pakistan's stock market witnessed its largest-ever intraday decline Monday, mirroring a global sell-off driven by escalating tariff tensions.

The benchmark index plunged more than 8,500 points at one stage before staging a recovery, closing down 3.3%. The decline came as markets around the world reeled from tariff measures initiated by the United States and retaliated against by other nations.

Muhammad Sohail, CEO of Topline Securities, attributed the sharp drop to the deepening trade conflict. “Following the global market crash, Pakistan's market lost 3.3% today due to the escalating tariff war,” he said.

Trading was briefly halted when the market fell 5%, but resumed after a cooling period, prompting some value buying.

Analysts warned that key sectors such as oil and gas exploration, technology, and textiles could face pressure due to their dependence on global commodity prices and demand.

"Lower oil prices may ease inflation and lead to further interest rate cuts, potentially impacting bank earnings going forward," one analyst noted.

Ahsan Mehanti of Arif Habib Corp said the sell-off was driven by concerns over a looming global recession, exacerbated by former U.S. President Donald Trump's tariff stance.

“Stocks plunged amid the rout in global equities after Trump showed no sign of backing away from tariff plans," Mehanti said. "Late-session recovery was seen on hopes the government would negotiate on U.S. tariffs.”

KSE-100 index shed 3.27% or 3,882.18 points to close at 114,909.48 points.

Market Halts in PSX (Pakistan Stock Exchange)

Why Market Halts Are Introduced: Market halts help control risk when stock prices change rapidly across different sectors. Pausing trading when the index moves significantly gives investors time to evaluate the situation before making decisions.

When Will Market Halts Be Applied?

• If the KSE-30 index moves 4% up or down from its opening value, trading will be paused.
• If circuit breakers hit 7.5% or Rs.1 (whichever is higher), market halts will apply only if the index moves 5% up or down.
• If the KSE-30 index keeps trading at 4% or 5% above or below the opening value for 5 minutes, trading in all stocks will be paused for 45 minutes.

What Happens During a Market Halt?

• Trading in all stocks and stock-related derivatives will stop.
• Before the market resumes, there will be a 5-minute pre-opening phase.
• NCCPL (National Clearing Company of Pakistan) will collect losses from clearing members as per rules.
• Only those brokers (BCMs/NBCMs) who have deposited the required funds will be allowed to trade once the market reopens.
• Market halts won’t apply in the last hour of trading, even if the index moves beyond the set limits.

Currency

US dollar steadied against PKR in the inter-bank market. Pakistani currency lost 11 paisas to close at 280.57. In the open market USD was trading at PKR 282.

Indian Stocks

Indian stock markets saw a sharp drop at the start of the week due to new tariffs introduced by Trump. These tariffs have caused investors worldwide to sell their stocks, and India was affected too.

The market fell because high US tariffs and other countries responding with their own could lead to a trade war. Industries like IT and metals have struggled more than others because of concerns that high inflation and slow growth might push the US economy toward a recession.

BSE-100 index shed 3.2% or 765.40 points to close at 23,182.38 points.

DFM General Index shed 3.08% or 152.46 points to close at 4,799.01 points.

Crude Oil

Oil prices kept falling on Monday morning in Europe and Asia as investors sold stocks across major markets. This followed last week’s tariffs introduced by US President Donald Trump, which hurt market confidence.

Concerns about global trade and economic health deepened over the weekend, especially after Wall Street’s worst week since the Covid-19 pandemic. As the sell-off carried into this week, crude prices also declined.

Brent crude prices decreased by 2.36% to $64.03 per barrel.

Gold Prices

Gold prices recovered some of their earlier losses on Monday as investors sought safer assets and central banks continued strong purchases. Prices had hit their lowest level in more than three weeks but remained on an upward trend according to analysts.

Over the past week, gold has dropped nearly three percent in US dollar terms after steadily rising since early 2024. The decline followed a sharp sell-off in global stock markets triggered by sweeping tariffs introduced by US President Donald Trump, which economists warn could push the world toward a recession.

International gold prices increased 0.14% to close at $ 3,041.34 per ounce. In the local market, gold prices remained unchanged at 320,000 per tola.