The stock market plummeted Thursday ahead of the release of the September inflation data today, with investors weighing the effects of higher prices and the weak peso on the third-quarter earnings of companies.
The Philippine Stock Exchange Index dropped 117.53 points, or 1.6 percent, to 7,093.34 on a value turnover of P4.3 billion. Losers overwhelmed gainers, 122 to 68, with 51 issues unchanged.
JG Summit Holdings Inc. of industrialist John Gokongwei slumped 5.1 percent to P50.80, while major property developer Ayala Land Inc. tumbled 4.7 percent to P38.60.
Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, fell 4.4 percent to P66, while Security Bank Corp., the sixth-largest bank, declined 3.4 percent to P144.80.
The US dollar, meanwhile, continued to brush aside other currencies Thursday after further proof of the booming US economy sent Treasury yields surging, but Asian equities sank with more Federal Reserve rate hikes looking certain.
The prospect of borrowing becoming even more expensive rattled equity traders in Asia.
Hong Kong lost 1.8 percent with property firms hit by concerns the higher rates—the city’s monetary policy is linked to the Fed’s—will hammer the booming real estate market.
Tokyo ended 0.6 percent lower, while Singapore, Seoul, Taipei, and Jakarta shed more than one percent. Mumbai was down 2.3 percent.
Sydney added 0.5 percent while Shanghai was closed for a public holiday.
“This withdrawal of liquidity and gradual tightening of monetary policy” by the Fed is reverberating across financial markets, Bob Baur, chief global economist at Principal Global Investors, told Bloomberg TV. He warned US Treasuries would likely rise further “later this year, early next year—and I think that’s going to be a real problem for stock markets.”
A forecast-busting private jobs report, a surge in activity in the services sector and optimism in the retail market were the latest evidence that the world’s top economy is firing on all cylinders, helping send the Dow to a record close for the second day in a row.
However, the news also saw a sell-off in safe-haven Treasuries—a sign of confidence –sending the cost of borrowing to its highest level in seven years, in turn fueling a surge in the dollar, helping it hit an 11-month high against the yen.
Hawkish comments from Fed boss Jerome Powell also provided momentum to dollar buying.
The greenback extended Wednesday’s gains against its major peers, with easing concerns about a row between Italy and EU leaders unable to staunch a sell-off in the euro.
Higher-yielding and emerging market currencies were among the worst hit.
The Chinese yuan took a hit, despite mainland markets being closed. The dollar jumped 0.2 percent to 6.9 against the offshore yuan, with some predicting it could break 7 at some point.
The US unit hit a record 73.82 Indian rupees and a fresh 20-year high against the Indonesian rupiah, with the two countries battered by surging oil prices and an outflow of cash as investors shift attention to US assets.
It was two percent higher against the South African rand, 1.5 percent up on the Mexican peso and one percent higher against the Australian dollar and South Korean won.
The New Zealand dollar and Thai baht were also sharply lower. With AFP