PSX market crash this week reflected intense market instability as the KSE-100 index recorded a historic intra-day drop of 8,688 points (-7.3%) on Monday. This unprecedented fall came amid growing global trade war concerns and plummeting crude oil prices, which dipped to $57.04 per barrel.

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The stock market decline followed the imposition of US reciprocal tariffs on 60 countries. However, after President Trump announced a 90-day pause in tariffs and local sentiment improved due to the Pakistan Minerals Investment Forum, the market saw partial recovery. Despite some gains, the index still ended the week down nearly 4,000 points.

Market Crash Fueled by Global Recession Fears

The market crash deepened on Monday as panic from international markets spread. The KSE-100 fell 3,882 points by close, settling at 114,909. This drop was largely linked to escalating US-China trade tensions, with China responding to US tariffs, raising fears of a prolonged trade war.

The following day, investors took a breather. The KSE-100 surged 1,783 points intra-day and closed 623 points higher at 115,532, signaling a temporary recovery. However, concerns returned on Wednesday, pushing the index down another 1,379 points to 114,153.

Eases Midweek Before Final Dip

On Thursday, the KSE-100 posted a strong comeback, gaining 2,036 points to close at 116,189. This positive trend followed Trump’s 90-day tariff pause and optimism from the Pakistan Minerals Investment Forum, which drew international interest and boosted local investor morale.

Yet, Friday saw another downturn. The benchmark index dropped 1,336 points, finishing the week at 114,853. The continued US-China tension and uncertain economic outlook kept investor sentiment subdued.

Economic Indicators Amid PSX Market Crash

Arif Habib Limited (AHL) noted that this week’s PSX market crash reflected global fears and domestic pressures. Despite promising developments such as mineral discoveries in Balochistan and Mari’s new gas find at Spinwam, the market closed 3,988 points lower (-3.3% WoW).

Foreign investors sold $9.9 million in shares, particularly in the banking sector, while local mutual funds offloaded $13.6 million. Average volumes rose by 14% to 557 million shares, and the total traded value increased 8% to $123 million.

PSX Market Crash Sparks Mixed Signals for Energy and Economy

Despite the PSX market crash, some positive economic updates emerged. The State Bank’s reserves rose by $23 million, reaching $10.7 billion. Additionally, Pakistan’s oil reserves increased by 23% due to new field additions, indicating strength in the energy sector.

In a key regional energy move, a Pakistani consortium will begin production in Adnoc’s offshore block-5 by 2027. Meanwhile, PPL started gas production from the Pateji X-1 reservoir, and Mughal Energy is set to launch its coal power unit after a successful boiler test in June.

The PSX market crash underscored growing investor anxiety, driven by geopolitical tensions and tariff threats. The Ministry of Commerce forecasted a potential $1 billion export loss due to a 29% US tariff on Pakistan. Meanwhile, the Asian Development Bank revised Pakistan’s GDP forecast to 2.5% for FY25.

Ultimately, while the market experienced brief recoveries, the PSX market crash reflects the broader challenge facing Pakistan’s economy—balancing local optimism with global uncertainty. Strategic policy responses and regional cooperation are now essential to restore investor confidence and stability.

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