Market slides into red as US tariffs trigger panic selling

• 03 Apr 2025
• 0

The Colombo bourse reversed course from earlier sessions this week, closing in the red amid volatility. The ASPI ended at 15,658, steadily declining from the open and shedding 350 points. HNW participation remained subdued, while retail investors were more active.

Panic selling gripped export oriented counters largely following the reciprocal tariffs imposed by the US while increased selling was noted among banking stocks as well. Negative contributors far outweighed positive ones, with COMB, HAYL, MELS, HNB, and SAMP leading the declines.

A notable transaction amounting to a 38% stake of TSML shares were sold by JKH, contributing largely to today’s Turnover, which stood at LKR 3.8Bn. This marks an 80.4% increase from the monthly average of LKR 2.1Bn.

The Capital Goods sector was the most significant contributor to the overall turnover with a 29% share, followed by the Banking sector at 24% and the Food, Beverage & Tobacco sector at 18%. Foreign investors turned net buyers, with a net inflow of LKR 1.9Mn.

U.S. tariff proposals dampen investor sentiment; yield curve increases by 10-15bps

After the announcement of reciprocal tariffs by the U.S. this morning, the secondary bond market experienced selling pressure, causing the yield curve to rise across the board.

During the morning session, the 15.09.2028 and 01.10.2028 maturities traded at the rates of 10.35% and 10.40%, respectively, while the 15.06.2029 and 15.09.2029 maturities traded at the rate of 10.75%.

As more clarity emerged, yields across the curve adjusted. In the latter part of the today’s trading session, the 15.02.2028, 15.07.2028, and 15.10.2028 maturities traded at 10.05%, 10.10%, and 10.30%, respectively.

Additionally, the 15.06.2029, 15.09.2029, 15.05.2030, and 15.10.2030 maturities traded at 10.50%. In the forex market the LKR showcased an appreciation against the greenback, standing at LKR 296.1/USD in comparison to LKR 296.2/USD registered on the previous day.

Meanwhile, overnight liquidity in the banking system rose to LKR 183.7Bn from LKR 174.4Bn seen previous day, whilst CBSL holdings of government securities remained stagnant.

Courtesy: First Capital Research

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