Investor sentiment shaken as US tariffs send equities tumbling

By Almas Equities Research

Investor sentiment took a significant hit this week as concerns mounted following the announcement of the newly imposed US tariffs, triggering a sharp downturn in the local equity market.

Fears that these trade measures would adversely affect the domestic economy became the dominant factor behind the market’s substantial decline. This impact resonated globally, with major international indices also recording notable losses.

Domestically, the investors’ primary concerns revolved around the potential currency fluctuations impacting the banking sector. Simultaneously, expectations of reduced demand for apparel exports, driven by the anticipated price increases, exerted downward pressure on the companies within the consumer durables and apparel sector. Consequently, the listed entities in these sectors on the Colombo Stock Exchange were among the most heavily affected.

The month of April had initially commenced with a bullish momentum, as the market registered gains during the first two trading sessions. The All Share Price Index (ASPI) climbed by 192 points, while the much liquid S&P SL20 index advanced by 27 points, suggesting a possible market correction. 

However, the unveiling of the new US tariff rates sparked a swift reversal. Heavy selling activity ensued, characterised by high turnover and trading volumes. By the week’s end, the ASPI had fallen by 441.47 points (-2.79 percentage) and the S&P SL20 had plunged by 201.37 points (-4.25 percentage), underscoring the pronounced impact on the blue-chip stocks and overall investor confidence.

Despite the shortened four-day trading week, turnover experienced a significant surge, reaching Rs.11.20 billion, with a total volume of 484.62 million shares traded, resulting in an average daily turnover of Rs.2.80 billion. The retail investors appeared to be offloading positions in export-oriented and banking counters as a strategy to mitigate the potential losses.

Among the top contributors to the week’s turnover was John Keells Holdings PLC, generating Rs.1.32 billion, with a share volume of 66.21 million. A notable movement was observed in Sampath Bank PLC, which recorded a turnover of Rs.917 million. However, its share price experienced a sharp decline of 13.25 percentage points, concluding the week at Rs.109.25.

Looking ahead, the investors are hopeful for political intervention to alleviate the pressures stemming from the tariffs. A resolution on this matter could ease the operational burdens faced by the exporters and restore their competitiveness, thereby supporting the nation’s broader macroeconomic objectives.