The Pakistan Stock Exchange (PSX) joined global markets in shedding 3,882.18 points, or 3.3% of its value, on Monday over mounting concerns regarding the escalating tariff war triggered by Donald Trump.
The KSE-100 index initially sunk to an intra-day low of 110,103.97 from the previous close of 118,791.66, reflecting a staggering drop of 8,687.69 points, or -7.31%. The sharp decline prompted the PSX to impose a lower lock, announcing the cancellation of all pending orders, with trading resuming at 1:03 p.m. Despite the break, selling pressure persisted, with the KSE-100 index eventually clawing back a recovery of 5,000 points, closing at 114,909.48.
According to analysts, the oil and gas exploration sector; technology; and textiles are most likely to be adversely impacted by the tariffs, as they are either linked to global commodity prices (like crude oil) or with global aggregate demand.
On a macroeconomic level, every $10/barrel decline in oil prices yields savings of $2 billion to Pakistan’s import bill for crude oil, refined oil (petrol, diesel), and RLNG. Analysts say that assuming a decline of 5-10% in textile exports ($250-500 million) to the U.S., the country could still emerge with a net positive, as its import bill for petroleum could decline by $1-1.5 billion.
In this scenario, the Pakistan Stock Exchange would respond positively, as sectors such as chemicals, cement, textiles, automobiles, and fertilizers tend to benefit directly from lower transportation and other oil-related input costs, making their profit margins more attractive. However, not all sectors win. Oil and gas exploration companies such as POL, OGDC and PPL may see their revenues and profitability decline, as their earnings are directly tied to global oil prices. This can weigh on the energy-heavy KSE-100 index in the short run, even if broader market sentiment improves.
However, analysts have warned, while lower oil prices might further ease inflation, enabling the State Bank of Pakistan to reduce interest rates, this could also result in lower earnings for banks.
Ahsan Mehanti, CEO of Arif Habib Commodities, said Monday’s plunge reflected the rout in global equities after the U.S. president showed no sign of backing away from his tariff plans, raising risks of a global recession. He said the late session recovery reflected the government’s hopes to negotiate with the U.S. on the tariffs, as well as Prime Minister Shehbaz Sharif’s recent electricity tariff cut, and the 0.7% inflation, year-on-year, recorded in March 2025.