Stocks sank Thursday as trade war worries again permeated markets across Asia, with investors quickly taking profits after a brief rally the other day.
The Philippine Stock Exchange Index slumped 109.86 points, or 1.5 percent, to 7,066.57 on a value turnover of P5.8 billion. Losers beat gainers, 114 to 79, with 51 issues unchanged.
Jollibee Foods Corp., the biggest fastfood chain, lost 4.2 percent to P259.60 on concerns a faster inflation will curb sales, while SM Prime Holdings Inc. of retail tycoon Henry Sy Sr. dropped 3.5 percent to P34.25.
Megaworld Corp., the largest lessor of office spaces, declined 3.6 percent to P4.25, while GT Capital Holdings Inc. of tycoon George Ty slipped 1.7 percent to P900.
Mixed signals from the White House, meanwhile, again fueled uncertainty in Asian trading, but energy firms kicked higher thanks to another surge in oil prices.
Concerns about the Chinese economy are also hurting confidence, with the yuan continuing to weaken and mainland stocks now in bear market territory having fallen more than 20 percent from recent highs.
Dealers are struggling to get a handle on the situation owing to confusion over Donald Trump’s trade strategy.
The president seemed to back off a plan to impose tough new restrictions on Chinese investment in the United States, soothing concerns about a conflagration between the world’s top economies.
But later his economic advisor and trade hawk Larry Kudlow warned that stern measures were still being contemplated.
“If the administration doesn’t understand what the president is trying to achieve from his trade policy, that is hardly a sign of confidence for investors,” said Stephen Innes, head of Asia-Pacific trade at OANDA.
“It would be entirely natural if investors were a bit confused as indeed confusion reigns supreme.”
Equity markets fluctuated through the day and Tokyo ended slightly lower, while Hong Kong shed 0.4 percent in the afternoon and Shanghai closed 0.9 percent down.
Seoul fell more than one percent, while there were also losses in Singapore, Taipei, Bangkok and Jakarta. Sydney rose slightly 0.3 percent.
With no sign of the trade spat easing any time soon there are growing concerns about the impact on the Chinese economy, with growth already showing signs of slowing and stocks plunging 22 percent since its 2018 peak in January.
The yuan is also at its weakest level against the dollar since December, having endured one of its worst runs since its mid-2015 devaluation that sparked a global market meltdown.
But speculation the People’s Bank of China is allowing the currency to weaken to offset the effects of any US tariffs were dismissed by Capital Economics.
“While a weaker currency could offset some of the economic damage done by US tariffs, the wider risks to financial stability would not be ones worth taking,” the consulting firm said.
Investors were also spooked by reports of a leaked report by a government-backed think tank that warned of possible “financial panic” in the Chinese economy. With AFP