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Friday, March 29, 2024

Stock market falls to 15-month low

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The stock market plunged to a 15-month low on Monday on fresh fears of a trade war between the world’s top two economies after the United States and China imposed tit-for-tat tariffs on billions of dollars of imports.

The Philippine Stock Exchange Index sank 115.43 points, or 1.5 percent, to 7,414.11, its lowest since closing at 7,341.65 points on April 3, 2017. Losers overwhelmed gainers, 161 to 44, with 40 issues unchanged.

Conglomerate Ayala Corp. lost 2.6 percent to P925.50, while banking unit Bank of the Philippine Islands, the third-biggest lender in terms of assets, slumped 3.6 percent to P92.35.

PLDT Inc., the largest telecommunications firm, tumbled 3.6 percent to P1,251, while Metro Pacific Investments Corp., which is into toll roads, water and electricity distribution, infrastructure and hospitals, dropped 3.4 percent to P4.82.

Most Asian markets tumbled on Monday, with energy firms among the biggest losers as oil prices plunged ahead of a key Opec meeting, where Saudi Arabia and Russia are expected to lift a two-year-old production cap.

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Donald Trump’s decision to hit China with 25 percent levies was met with an immediate retaliation, moving the two closer to a trade war that could potentially batter the global economy.

The announcement came despite weeks of talks between the two sides.

The developments sent stocks into the red across Europe and on Wall Street, and Asian investors followed suit on Monday.

Tokyo ended 0.8 percent down, while Singapore sank more than one percent, and Seoul dropped 1.3 percent.

Wellington and Bangkok were both down but Sydney eked out a 0.2-percent gain.

Hong Kong and Shanghai were closed for public holidays.

“Many folks will tell you this isn’t a trade war. But when one side whacks a bunch of tariffs and the other side retaliates with its own set of tariffs against the other side, that looks very much to me like the battle has been joined,” said Greg McKenna, chief market strategist at AxiTrader.

“Whether it escalates is a different question.”

With traders fleeing to safer assets, the yen rose against the dollar, while the greenback rallied against most high-yielding currencies with the Australian dollar, South Korean won and Mexican peso all sharply down.

After losing around four percent last week, oil plunged again Monday as investors fret over Russia and Saudi Arabia’s expected move to ramp up output at an Opec meeting that starts Friday.

The two major producers have kept a ceiling in place since late 2016, which has helped ease a supply glut and lift prices, which had fallen to multi-year lows.

“Russia has been aggressively affirming itself by adding oil to market ahead of the upcoming meeting and is pushing for a significant output hike, Saudi Arabia is suggesting for a modest increase and others are in favor of the status quo,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“While most industry observers are expecting a production rise, the magnitude and timing of the boost remain uncertain.” With AFP

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