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Trump’s lead rattles markets

Stocks extended their slump to an eighth day, amid a global sell-off after a poll showed Donald Trump overtaking market favorite Hillary Clinton in the race for the White House.

The Philippine Stock Exchange index, the 30-company benchmark, plunged 152 points, or 2.1 percent, to close at 7,252.40 Wednesday, after a four-day break. It was the bellwether’s weakest finish in more than five months.

The heavier index, representing all shares, also dropped 71 points, or 1.6 percent, to settle at 4,326.83, on a value turnover of P7.9 billion.  Losers outnumbered gainers, 137 to 46, while 49 issues were unchanged.

Donald Trump. (AFP)

All six sectors posted losses, while only one of the 20 most active stocks ended in the green.  GT Capital Holdings Inc., the investment company of tycoon George Ty, gained 0.2 percent to P1,313.

Banks were the biggest losers Wednesday.  Security Bank Corp. retreated 6.9 percent to P205.20, while Metropolitan Bank & Trust Co. fell 5 percent to P77.20.  BDO Unibank Inc. lost 2.3 percent to P110.20.

The peso slightly rose Wednesday to close at 48.37 against the US dollar, from 48.405 per dollar on Oct. 28.  The local currency was hovering near a seven-year low, as investors shied away from emerging markets in anticipation of an interest rate hike by the US Federal Reserve before the end of the year.

Finance Secretary Carlos Dominguez III said the weakening of the peso against the greenback was not a “bad thing” for the country, as it would even boost the remittance and business process outsourcing sectors.

“As you know, there have been talks about the US Fed increasing their interest rates and actually, with the speculations such as that, practically all currencies in the world have slid against the US dollar,” Dominguez said.

“The Philippine [peso], in the last month, from Sept. 21 to Oct. 28, went down by one and a half percent. The Thai baht went down by 1 percent. The yen went down by three and a half percent. So across the board, across the world, currencies have been depreciating against the US dollar and primarily, it’s because of the potential increase in interest rates in US dollar,” Dominguez said.

Dominguez said people were buying the US dollar to take position once the Fed increased the interest rates.

Meanwhile, Asian stocks also traded lower Wednesday. With Clinton until last week comfortably ahead, traders were upbeat about her chances of winning on Nov. 8 but news Friday that the FBI were again looking at her emails has raised the prospect of Trump becoming president.

Trump is viewed as a wildcard, in part because of his harsh criticism of Federal Reserve chief Janet Yellen and international trade pacts.

“Since the FBI reopened its case into Hillary Clinton’s emails last Friday, her substantial lead in the polls has been decimated and some now even show Trump in the lead,” Craig Erlam, a senior market analyst at Oanda, said in a note.

“It’s been clear for some time now that markets would much prefer the stability that a Clinton victory would bring for the US economy and the reaction over the last 24 hours or so since the polls started to change so dramatically just confirms this. Trump risk is well and truly being priced in again,” Erlam said.

The news battered markets on Wall Street and in Europe, while the VIX volatility index, which is seen as a measure of the US market’s fears, was sitting near levels last seen after Britain voted in June to leave the EU. With AFP, Bloomberg, Gabrielle H. Binaday

Topics: Stock Market , Philippine Stock Exchange , Philippine Stock Exchange Index , PSE , PSEi , Donald Trump , Hillary Clinton
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