Iran’s strikes on the Fujairah oil port and subsequent U.S. retaliation have intensified geopolitical tensions despite optimism over peace talks, dampening sentiment and driving the Colombo Bourse lower today.

The ASPI declined by 111 points to close at 22,584, while the S&P SL20 fell by 31 points to 6,213, with CINS, CTHR, HAYL, SAMP, and HHL emerging as the top negative contributors.

Market participation from both HNW and retail investors remained subdued, reflecting an overall weak sentiment. Daily turnover stood at LKR 2.2Bn, marking a 42.1% decline from the monthly average of LKR 3.7Bn, with the Banking sector leading turnover at 17%, followed by the Diversified Financials and Capital Goods sectors collectively contributing 32%. Foreign investors remained net sellers, recording a net outflow of LKR 42.0Mn.

BOND MARKET

Secondary market sees renewed activity, yield curve edges higher

The secondary market bustled with activity today, breaking the cycle of lethargy that was observed yesterday and through the previous week. Following an escalation in geopolitical tensions yesterday, investor activity picked up sharply, resulting in elevated trading volumes.

The secondary market saw noteworthy selling pressure which prompted an upward adjustment of the yield curve.  At the short end of the curve, 15.02.2028, 15.05.2028, 01.07.2028 and 15.10.2028 traded at 9.53%, 9.75%, 9.83% and 9.85% respectively.

In terms of 2029 maturities, 15.06.2029 traded at 10.05% and 15.12.2029 traded at 10.10%. Moving ahead, 15.05.2030 was seen changing hands at 10.23% while 01.07.2030 traded slightly lower at 10.22%. Further along the yield curve 15.03.2031 changed hands at 10.27% while 15.12.2032 and 01.06.2033 traded at 10.80% and 11.08% respectively. Finally, 15.06.2034 traded at a rate of 11.24% and 15.09.2034 traded higher at 11.28%. 

On the external front, the LKR appreciated against the USD, standing at LKR 319.52/USD, compared to LKR 319.93/USD seen yesterday. Overnight liquidity in the banking system expanded to LKR 246.30Bn from LKR 226.55Bn recorded previously.

-First Capital Research