Market declines on rate hike fears
The stock market fell Monday on higher inflation prospects by the Bangko Sentral ng Pilipinas and on fears it will raise interest rates next month.
The Philippine Stock Exchange Index lost 15.78 points, or 0.2 percent, to 8,487.91 on a value turnover of just P5.9 billion. Losers beat gainers, 118 to 94, with 36 issues unchanged.
Jollibee Foods Corp., the biggest fastfood chain, declined 3.1 percent to P283, while DMCI Holdings Inc. of the Consunji Group, which is into coal mining, power generation, water distribution and property development, dropped 2.9 percent to P13.40.
Prime Orion Philippines Inc., controlled by Ayala Land Inc., jumped 28.1 percent to P3.65, while Now Corp., which is bidding to become the third telecommunications company in the Philippines, surged 9.7 percent to P7.90.
The rest of Asian markets mostly rose on Monday as buyers cautiously returned after last week’s global rout, with confidence boosted by a rally on Wall Street but analysts warning of further volatility.
After a stellar 2017 and a January that saw record and multi-year highs around the world, traders are scurrying to the hills this month as a strong economic outlook—particularly in the US—healthy corporate earnings and rising inflation have sent borrowing costs surging.
Equity markets, for years buoyed by post-crisis stimulus, have spiraled into the red as traders fret that the era of cheap cash is at an end.
But Monday got off to a calm start.
Hong Kong, which sank more than nine percent last week, was up 0.7 percent in the afternoon while Shanghai closed up 0.8 percent and Singapore rose 0.6 percent.
Seoul gained 0.9 percent, with traders cheered by signs of a thaw in relations between North and South Korea during the Winter Olympics after Kim Jong Un—whose sister attended the opening ceremony in Pyeongchang—invited the South’s President Moon Jae-in for a summit in Pyongyang.
Taipei added 0.5 percent and Bangkok 0.3 percent but Sydney eased 0.3 percent and Manila dipped 0.5 percent. Tokyo was closed for a public holiday.
The gains came after a late rally on Wall Street helped all three main indexes end on a positive note Friday, though still well down over the week.
However, there are expectations that profit-taking will lead to further losses, with Brian Culpepper at James Investment Research warning: “Stocks are extremely expensive.”
Eyes are now on the release this week of US inflation figures, which market-watchers say will be key to future movements.
“With powerful US economic signals and interest rates most certainly to rise quicker than expected, last week’s tumult could be little more than the start of the equity roller-coaster,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“Given all this ruckus started with an uptick in the wage growth component from this month’s (US jobs report) release, this week’s US inflation data will be a monster of a print.”
While the week got off to a positive start, energy firms took another hiding after further recent falls in the price of oil due to rising US production and the spillover from the equity market rout. With AFP