Colombo Share Market rallies after sharp losses sparked by US tariff shock
April 08, Colombo (LNW): Sri Lanka’s capital market saw a notable resurgence on Tuesday (08) following three consecutive sessions of steep declines, which had been triggered by a global wave of market instability after the United States imposed sweeping new tariffs.
The recovery came as a relief to investors who had watched billions in market value evaporate in a matter of days.
At the close of trading, the Colombo Stock Exchange (CSE) saw the benchmark All Share Price Index (ASPI) rise by 467.26 points, marking a 3.19 per cent increase and closing at 15,127.71.
Meanwhile, the S&P SL20 Index, which tracks the performance of the top 20 listed companies, surged by 190.29 points or 4.46 per cent, finishing the day at 4,455.13. Market turnover surpassed Rs. 2.89 billion, a signal of renewed investor confidence.
This positive swing followed a dramatic downturn that saw the local bourse shed nearly Rs. 435 billion in value in just three trading days. The slump was triggered by an announcement from US President Donald Trump, who unveiled a new trade regime last week that included a flat 10 per cent tariff on imported goods and additional “reciprocal” tariffs targeting specific nations. Sri Lanka was amongst those affected, hit with a harsh 44 per cent levy under the new formula.
The resulting panic reverberated through the CSE almost immediately. On April 02, the ASPI plummeted by 712.9 points—a single-day drop of 4.64 per cent—wiping out Rs. 227 billion in market capitalisation.
In total, the index fell 1,346.99 points (8.41 per cent) over the three-day slide, with a collective loss of over Rs. 430 billion during that period.
The fallout prompted a swift response from the Sri Lankan government. President Anura Kumara Dissanayake moved to calm the markets, convening an expert committee to study the implications of the reciprocal tariffs and develop recommendations to mitigate long-term impacts on the economy and investor sentiment.
The administration also pledged to engage diplomatically with US officials to revisit the terms of the tariff policy as it applies to Sri Lanka.
Despite the early damage, Tuesday’s rebound has been seen as a sign that confidence may be gradually returning to the market. Analysts credit the recovery partly to assurances from the government, as well as opportunistic buying by investors who viewed the recent downturn as a chance to acquire undervalued equities.
Market watchers, however, remain cautiously optimistic. Whilst the day’s performance provided a much-needed reprieve, concerns linger about the long-term impact of the US tariffs on Sri Lanka’s export-driven sectors, especially apparel and agriculture, which are vulnerable to such trade disruptions.
