Market slides; MPIC, Megaworld top gainers

Stocks fell Wednesday, ending a four-day advance as it tracked the downfall of Asian markets worrying over escalating provocations from North Korea. 

The Philippine Stock Exchange index, the 30-company benchmark, dropped 65 points, or 0.8 percent, to close at 7,983.97, as all six major sectors declined.

The heavier index, representing all shares, tumbled 27 points, or 0.6 percent, to settle at 4,739.21, on a value turnover of P6.7 billion.  Losers outnumbered gainers, 111 to 71, while 66 issues were unchanged.

Five of the 20 most active stocks ended in the green, led by developer Megaworld Corp. which climbed 2.4 percent to P5.18 and conglomerate Metro Pacific Investments Corp. which rose 1.5 percent to P6.63.  DMCI Holdings Inc., the investment company of the Consunji family, gained 1.3 percent to P15.60.

Universal Robina Corp., the food manufacturing unit of the Gokongwei Group, rose 1.3 percent to P152, while gaming company Bloomberry Resorts Corp. added 0.2 percent to finish at P11.58.

Meanwhile, equities slid from Hong Kong to Sydney and European equity-index futures declined as traders girded for a potential intercontinental ballistic missile launch by Pyongyang, which will celebrate its “foundation day” Saturday. 

US stock futures fluctuated after the main gauges dropped overnight, hurt also by the historically powerful Hurricane Irma as it heads toward Florida. Dovish comments from Federal Reserve officials helped propel a surge in US Treasuries and undercut the dollar, with traders increasingly skeptical the central bank will raise interest rates again this year.

The case for a continued risk-off tone was supported by a lack of consensus among the US, Russia and China on how to pressure Kim Jong Un to abandon his nuclear ambitions. Russian President Vladimir Putin has rejected US calls for more sanctions, echoing China’s resistance to more punitive measures.

Further volatility may be in store as the North Korea situation evolves. Ruchir Sharma, Morgan Stanley head of emerging markets and chief global strategist, told Bloomberg Television that “markets have a terrible history of pricing in geopolitics.” He predicted “shallow declines,” though not enough to avoid being “taken by complete surprise” in the event of something serious happening.

The North Korean nuclear crisis dragged Asian markets further into the red.  With few other catalysts to deflect attention from the face off with Pyongyang, investors continue to flock to safe-haven assets, sending gold to near one-year highs and the yen flying.

UN Secretary General Antonio Guterres warned against “confrontational rhetoric” towards Kim Jong-Un’s regime and called for a single strategy to address the crisis issue following Sunday’s apparent test of a massive nuclear device.

While the heated rhetoric of the previous two days has cooled, there are fears of a fresh flare up as the North is feared to be preparing another missile launch to mark its foundation day.

US markets returned from their long Labor Day weekend on Tuesday to finish sharply lower and US Treasury yields are at one-year lows.

In Asia on Wednesday, Seoul shed 0.3 percent, Tokyo ended the morning session 0.3 percent lower and Hong Kong gave up 0.9 percent.

Shanghai was 0.4 percent lower and Sydney gave up 0.1 percent, while Singapore, Wellington and Taipei were also lower.

The dollar, already down against the safe-bet yen on geopolitical concerns, took another hit from comments by Federal Reserve officials playing down the chances of a third rate hike of the year.

Fed governor Lael Brainard said the central bank had continued to miss its two percent inflation target for the past year and added: “My view is that we should be cautious about tightening policy further until we are confident inflation is on track to achieve our target.”

In early trade Wednesday the dollar was at 108.70 yen, heading towards its weakest levels of the year.

Stephen Innes, head of Asia-Pacific trading at Oanda, said that while the North Korea crisis was clearly weighing on the dollar, “an unabashedly dovish Fed Brainard was unquestionably the reason for the deeper USDJPY move into the 108s”.

Adding to the sense of unease is concern about President Donald Trump’s chances of pushing through his tax-reform plans, with Capitol Hill already struggling with a crammed legislative calendar.

And Trump’s decision Tuesday to end an amnesty program for 800,000 people brought to the United States illegally as young children will add to the backlog. With Bloomberg, AFP

Topics: stock market , Philippine Stock Exchange , Philippine Stock Exchange index , PSE , PSEi , Metro Pacific Investments Corp. , Megaworld Corp.
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