Stocks fell Thursday, as investors in Asia began to assess the regional implications of US President Donald Trump’s tax-cut plan.
The Philippine Stock Exchange index, the 30-company benchmark, dropped 65 points, or 0.8 percent, to close at 8,156.04, as five of the six major sectors declined.
The heavier index, representing all shares, also slid 32 points, or 0.7 percent, to settle at 4,818.25, on a value turnover of P10.6 billion. Losers outnumbered gainers, 141 to 70, while 38 issues were unchanged.
Four of the 20 most active stocks ended in the green, led by renewable power company Energy Development Corp. which climbed 4.1 percent to P5.64 and gaming company Bloomberry Resorts Corp. which gained 3.3 percent to P10.76. BDO Unibank Inc., the largest lender, rose 0.8 percent to P130.70, while retailer Puregold Price Club Inc. went up 0.6 percent to P52.
Meanwhile, Australian and Japanese bonds joined a global sell-off and Treasury yields reached the highest levels in two months as investors raised their expectations for the Federal Reserve to raise rates one more time this year despite some of Chair Janet Yellen’s colleagues continuing to push back at her contention more hikes are on the way.
The dollar extended its gains in Asia as focus turned back to the United States after Donald Trump unveiled his market-friendly tax cut plans.
However, regional equities struggled to track Wall Street higher despite a broad move back to riskier assets—as North Korea went on the backburner—with Treasury yields rising and safe-haven gold prices slipping.
After months of waiting, Trump released a tax reform blueprint that would slash corporate rates, provide relief for firms that repatriate cash from overseas and reduce the number of tax brackets from seven to three.
The tycoon described it as “the largest tax cut, essentially, in the history of our country”, while House Speaker Paul Ryan said it was “a once-in-a-lifetime opportunity that is all about more jobs, fairer taxes and bigger pay checks for American families”.
Trump’s promise to reduce taxes, ramp up infrastructure spending and slash red tape helped drive a global market rally in the months after his November election win. But those gains fizzled as his legislative agenda suffered a series of blows and his White House has become embroiled in a host of crises.
The bill is expected to face a tough passage through Congress, with both sides of the aisle likely to question its affordability, while it received a mixed review from economists, and business and union leaders.
Still, the unveiling sparked a rally in the dollar as dealers bet such tax cuts would fuel inflation. The unit was already healthy following an indication from Federal Reserve boss Janet Yellen that she was in favor of further hikes.
“In the space of two days we’ve now had confirmation Janet Yellen is going to keep hiking rates and President Trump’s ‘Gang of 6’ have delivered a tax plan that might get through,” said Greg McKenna, chief market strategist at AxiTrader.
The dollar was back above 113 yen in Asia, having briefly broken the level for the first time since July on Wednesday. With AFP, Bloomberg
The gains in the dollar against the yen helped Japan’s exporters, leaving the Nikkei 0.5 percent higher by the close. There was little impact on Japanese markets after Prime Minister Shinzo Abe officially dissolved parliament, kicking off campaigning for a national election on Oct. 22.
While Sydney and Singapore eked out small gains, Hong Kong, Shanghai, Taipei and Wellington were all lower.
Oil market investors are keeping tabs on events in the Middle East after Kurds overwhelmingly voted for independence from Iraq, which has sparked fears of a crackdown by Baghdad and possible military confrontation.
The vote led Iraq’s leaders to threaten to take over oil fields in the region, while Turkey said it would cut off exports.
McKenna described the situation as “something to watch geopolitically and for oil traders as the market tightens up.” With AFP, Bloomberg