CSE declines sharply as Middle East tensions worsen

By Almas Equities Research 

The Colombo Stock Exchange (CSE) closed on a negative note today, recording a significant decline from the start of the trading session, as both the ASPI and S&P SL20 indices fell sharply. The downturn was primarily driven by escalating geopolitical tensions between Iran and Israel, which continue to deteriorate. Investor sentiment remains highly cautious, particularly amid growing concerns over U.S. involvement in the conflict. Additionally, fears surrounding a possible closure of the Strait of Hormuz by Iran have intensified, as such a move could lead to a sharp increase in global oil prices, further impacting market stability.

The All Share Price Index (ASPI) declined by 322.55 points, or 1.89%, to close at 16,765.40. Similarly, the S&P SL20 Index lossed by 108.10 points, or 2.12%, ending the session at 4,991.18. Total market turnover amounted to LKR 2.49 billion, with 193.856 million shares traded. Market breadth reflected a broad negative sentiment, with only 24 gainers and 202 losers contributing to the overall movement of the ASPI.

HNB Assurance PLC (HASU.N) emerged as the top contributor to the ASPI, adding 1.22 points, while Sampath Bank PLC (SAMP.N) was the largest detractor, subtracting 21.82 points. The Banks sector led sectoral turnover with LKR 0.639 billion, accounting for nearly 26% of total market turnover.

Crossing transactions were involved today trading session, contributing approximately LKR 0.152 billion roughly 6% of the day’s turnover. The largest crossings were recorded in shares of  Capital Alliance Holdings Limited (CALH.N) totaling LKR 55.65 Mn with 3.5 Mn shares traded.

On the macroeconomic front, the overall rate of inflation, as measured by the National Consumer Price Index (NCPI) on a Year-on-Year (YoY) basis, increased to 0.6% in May 2025, compared to -0.8% in April 2025, according to the latest data released by the Department of Census and Statistics. The YoY inflation of the Food Group rose to 5.9% in May 2025 from 2.9% in April 2025, while the YoY inflation of the Non-Food Group improved slightly to -3.4% from -3.7% over the same period.