Stocks fell for a third day while the peso slid to a new three-month low, following overnight losses on Wall Street and on anticipation of another interest rate hike by the US Federal Reserve before the end of the year.
The Philippine Stock Exchange index, the 30-company benchmark, dropped 28 points, or 0.4 percent, to close at 7,858.34, as five of the six sectors declined.
The heavier index, representing all shares, also went down 9 points, or 0.2 percent, to settle at 4,699.52, on a value turnover of P8.7 billion. Losers outnumbered gainers, 102 to 98, while 47 issues were unchanged.
Ten of the 20 most active stocks ended in the green, led by Crown Equities Inc. which surged 10.4 percent to P0.201 and East West Banking Corp. which jumped 5.4 percent to P29.50. Alliance Global Group Inc. of tycoon Andrew Tan rose 2.1 percent to P14.40.
Meanwhile, the peso lost five centavos Thursday to close at 50.345 against the US dollar. It was its weakest level since it settled at 50.36 on March 14, 2017. Total volume turnover reached $802 million, higher than $727 million on Wednesday.
This marked the ninth straight day the peso fell since it traded at 49.495 on June 8, 2017.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said in a news briefing that the markets thought, after previous statements from Fed officials, that there was a definitive clue that the US central bank would continue policy tightening once this year and two to three times more next year.
“The peso actually depreciated starting yesterday [Wednesday], hitting 50 to a dollar on account of pronouncements of some Fed officials that even if inflation is still off-target, the fact that labor market conditions are becoming tighter, that would in effect be transmitted in terms of higher inflation. As the labor market continues to tighten, there would be some pressure on inflation moving forward,” Guinigundo said.
“Because of that, market thought that is a definitive clue that they will continue tightening monetary policy in the US, that means one more time before end of year, and 2-3 times in 2018. That’s one of the major reasons why the dollar became strong relative to the peso,” Guinigundo said.
Asian markets mostly rebounded Thursday from the previous day’s sell-off but energy firms struggled to recover after another plunge in oil prices as glut fears return.
Both main crude contracts dived more than two percent Wednesday despite a bigger-than-forecast drop in US inventories, with analysts suggesting OPEC and Russia should announce further output cuts.
“The fact that oil is now falling on a bullish inventory number must be a red light for producers and traders alike,” said Jeffrey Halley, senior market analyst at Oanda.
“Opec/non-Opec must now confront the oil elephant in the room, increasing the overall production cut from its present levels. The other choice will be to let the market set the price, which may mean oil drops to a level that even the newly slimline US shale industry struggles to break even at.”
However, the crisis comes at a time of heightened tensions between OPEC kingpin Saudi Arabia and fellow members Iran and Qatar, leaving little chance of cooperation.
While crude edged up slightly in Asia, it is down around 25 percent from its January highs and sitting at levels not seen since August.
That has dug into energy firms for another day. In Hong Kong, Sinopec was 0.7 percent off while PetroChina slipped 0.4 percent. Inpex tumbled 1.5 percent in Tokyo, although Sydney-listed Woodside Petroleum edged up 0.1 percent on bargain-buying.
Broader markets enjoyed a mostly positive day. Hong Kong rose 0.2 percent in the afternoon and Sydney put on 0.7 percent while Singapore gained 0.4 percent and Seoul 0.5 percent.
Shanghai ended 0.3 percent down after Wednesday’s rally that was fuelled by MSCI finally approving Chinese mainland-listed or A-shares for inclusion in its emerging markets index.
Tokyo finished 0.1 percent lower, with Takata the standout loser. The airbag maker crashed 55 percent Thursday on fears it is headed for bankruptcy and plans to sell its assets to a US company.
The Tokyo-based company at the center of the global auto industry’s biggest-ever safety recall has tumbled for four straight days and its stock is now worth less than a quarter of its value just a week ago.
In currency trade the dollar was unable to break out against the pound and yen, despite Federal Reserve indications it will hike interest rates again this year.
In early European trade London slipped 0.4 percent, Paris lost 0.3 percent and Paris was 0.1 percent off. With Bloomberg, AFP