The stock market declined Monday taking its cue on Asian trading, as another strong US jobs reading further fanned expectations the Federal Reserve will hike interest rates at a quicker pace.
The Philippine Stock Exchange Index fell 27.38 points, or 0.4 percent, to 7,050.82 on a value turnover of nearly P4 billion. Losers beat gainers, 115 to 71, with 56 issues unchanged.
Puregold Price Club Inc. of retail tycoon Lucio Co. dropped 4.1 percent to P42.20, while Jollibee Foods Corp., the biggest fast-food chain, slipped 1.6 percent to P243.
Conglomerate Metro Pacific Investments Corp., however, advanced 4 percent to P4.95, while Globe Telecom Inc., the second-largest telecommunications company, gained 2.6 percent to P2,330.
The rest of Asian markets fell on Monday, extending last week’s sell-off.
Shanghai led the retreat as mainland investors returned from a week-long break, during which time China was accused of using microchips in computer equipment sold in the US as part of a drive to steal technology secrets.
The losses in China also came despite a cut in the amount of cash the country’s commercial banks must keep in reserve, which its central bank says will pump more than $100 billion into financial markets.
Dealers were given a negative lead from Wall Street, where all three main indexes ended with sharp losses following news that unemployment had hit a 49-year low and wages saw healthy gains.
The report, which followed a slew of strong indicators on the world’s top economy, saw yields on benchmark 10-year Treasuries rise for the third straight day, hitting a fresh seven-year high with the Fed expected to stick to its rate hike drive.
Analysts said the sudden surge in interest rates had deepened worries about higher inflation and an uptick in costs for loans and mortgages.
Richard Jerram, chief economist at Bank of Singapore, said while the Fed would not be panicked by the increase in wages “evidence that tight capacity conditions—such as a low unemployment rate—are pushing prices higher will keep them on the current tightening path.
“Another rate hike in December seems very likely, and we expect four more in 2019.”
The losses in New York seeped into Asia, where Shanghai sank 3.7 percent, while Hong Kong lost 1.4 percent in the afternoon with property firms hit by expectations the city’s banks will lift mortgage rates again as they track a likely Fed hike. The Hang Seng has lost more than five percent over the past five trading days.
Sydney retreated 1.4 percent, Singapore eased 0.5 percent, and Taipei and Seoul were each 0.6 percent lower.
Tokyo was closed for a public holiday.
Chinese dealers were playing catch-up with sharp losses last week, when Bloomberg reported that Beijing inserted microchips into equipment made in China for Amazon and Apple, and possibly for other companies and government agencies.
It claimed a unit of the People’s Liberation Army was involved in the operation that looked to steal tech secrets. Mainland tech firms tumbled across the board, while companies in Hong Kong and Taipei including Lenvo and Taiwan Semiconductor Manufacturing also extended Friday’s sharp losses. With AFP