KARACHI: An intensified tariff war and rising fears of a global recession fuelled by retaliation from the United States` major trade partners and China caused a meltdown on the Pakistan Stock Exchange (PSX) on Monday.

Goldman Sachs forecast a 45 per cent chance of recession in the US over the next 12 months and made downward revisions to its oil price projections. Citi and Morgan Stanley also cut their Brent outlooks.

Meanwhile, JPMorgan said last week that it sees a 60pc probability of recession in the US and globally.

The benchmark KSE-100 index witnessed a record intraday plunge (points-wise) of 8,687.68 points, before partially recouping some losses on late value-hunting, following a midsession trading halt.Last Thursday, the PSX had hit an all-time high near 119,000, in sharp contrast to reeling global markets following the `Liberation Day` reciprocal tariffs imposed by US President Donald Trump the previous day.

Pakistani shares delivered a robust performance on the back of some domestic triggers, including a sharp deceleration in inflation, and the long-awaitedcut in electricity prices for residential and industrial consumers.

After showing some resistance over the two working days post-Eidul Fitr, equities fell like ninepins on Monday, with the quantum of losses suggesting that the downturn was not merely due to the global rout.

It was also driven by economic weaknesses such as a depreciating rupee, falling foreign exchange reserves and continuous contractions in largescale manufacturing, which turned investors jittery leading to panic-selling across the board.

Commenting on the bloodbath, AKD Securities Ltd CEO Muhammad Farid Alam told Dawn that the market overreacted as social media kept discussing `black Monday` and Asian markets opened extremely low.

`The developed world, and countries exporting large amounts to the United States have all the reason to be nervous on tariff-related issues, but not Pakistan, which may feel the brunt of the new tariff regime rather mildly value-wise and qualitatively due to perceived demand destruction,` he observed.

He hoped that the Pakistani equity market would regain its lost ground in a day or two.

Topline Securities Ltd Chief Executive Mohammed Sohail saidthe PSX crashed following panic selling on global markets. Leverage investors dumped their positions amid fear of a worldwide stock market crisis, which may also affect the Pakistani market.

Oil scrips, in particular, saw selling after crude oil on the international market dropped to $60 per barrel.

He said the Pakistan market lost 3.3pc owing to the escalating tariff war initiated by the US and subsequently retaliated by other nations.

Oil and gas exploration, technology, and textile sectors were expectedtobe affected,asthese are either linked to global commodity prices (like crude oil), or global aggregate demand.

On the other hand, amid lower oil prices, inflation might ease and help reduce interest rates further, which may impact banks` profitability in the future.On the macro side, he noted that every $10 per barrel decline in oil prices resulted in import bill savings of $2bn for crude oil, refined oil (petrol and diesel), and RLNG.

Assuming a decline of 5-10pc in textile exports to the US (which is $250-500m), the country will save a net $1-1.5bn in import bills.

Trading suspended Opening sharply negatively and experiencing relentless selling pressure throughout the day, the benchmark index nosedived to an intraday low of 8,687 points or 7.31pc,registeringthe largestintraday point-wise drop in PSX history.

While this decline set a new record in absolute terms, it was not the steepest in percentage terms.

The most severe single-session percentage fall remains the 12.4pc drop noted on June 1, 1998.

In response to the extreme vola-tility, trading was temporarily suspended for one hour, triggered by the KSE-30 index falling more than 5pc for five consecutive minutes, activating the market`s circuit breaker mechanism, according to Topline Securities.

However, some stability returned during the later hours as valuehunters stepped in, helping the indexrecoverpart ofthelosses.The session eventually closed at 114,909 points, down by 3,882 points or 3.27pc day-on-day.

The major drag came from Engro Holdings, Oil and Gas Development Company, Pakistan Petroleum Ltd, Hub Power, and PSO, which collectively contributed a negative impact of 1,247 points.

Ali Najib, Head of Sales at Insight Securities, said the PSX had the most volatile day in its trading history. The new week commenced negatively as thebenchmark index lost 1,100 points in the pre-open session amid low volume, which converted into broad-based panic selling as the day progressed, triggering a market halt at 11:58 am.

By then, the index had lost over 5.5pc or 6,287 points and halted at 112,504. After an hour`s break, the trading resumed, but the index continued its correction, which compelled the benchmark index to record an intra-day low at 110,104 points.

He observed that value-hunters came to rescue the melting market as their comprehensive buying assisted the index in showing quite an impressive recovery and ultimately settled at 114,909 points.

The panic-selling was well reflected in the higher market participation as the trading volume rose 28.37pc to 710.78 million shares while the traded value surged21.21pc to Rs43.02bn day-on-day.

Stocks contributing significantly to the traded volume included WorldCall Telecom (55.27m shares), Cnergyico PK (53.40 m shares), The Bank of Punjab (34.15 m shares), Pak Elektron (33.48 m shares) and Maple Leaf Cement (33.26 m shares).

The shares registering the most significant increases in their share prices in absolute terms were Philip Morris (Rs98.20), Thal Industries (Rs24.28), Macter International (Rs20.94), Bela Automotives (Rs11.47) and Punjab Oil Mills (Rs5.99).

The companies registering significantdecreasesin theirshareprices in absolute terms were Bata Pakistan (Rs157.05), Nestle Pakistan (Rs149.98), Ismail Industries (Rs148.21), Rafhan Maize (Rs100.50) and Unilever Foods (Rs94.03).