The stock market tumbled Thursday joining the rout in the rest of Asia-Pacific following the worst session on Wall Street for months, as US President Donald Trump said the Federal Reserve had “gone crazy” with plans for higher interest rates.
The Philippines Stock Exchange Index slumped 116.76 points, or 1.7 percent, to a new 21-month low of 6,884.38 on a value turnover of P5.4 billion. Losers overwhelmed gainers, 167 to 39, with 34 issues unchanged.
GT Capital Holdings Inc. of tycoon George Ty dropped 5.5 percent to P671, while Now Corp., which is bidding to become the country’s third major telecommunications firm, plummeted 15.3 percent to P4.36.
SM Investments Corp. of retail tycoon Henry Sy Sr. fell 3.2 percent to P850.50, while International Container Terminal Services Inc., the biggest port operator, declined 2.1 percent to P93.
Shanghai plummeted nearly five percent while Tokyo and Hong Kong both shed around four percent, as investors fretted about surging interest rates and the ongoing US-China trade war.
“All bets are off,” warned Stephen Innes, head of Asia-Pacific trading at OANDA, adding that markets were “fraught with peril.”
“The US equity bloodbath is taking no prisoners in Asia as a sea of red greets investors at the open, as equity deleveraging and liquidation intensifies,” he said.
Taipei and the Shenzhen Composite Index—which tracks stocks on China’s second exchange—were both down around six percent.
Seoul fell more than four percent and Sydney and Singapore both dropped more than 2.5 percent.
The steep drop in Asia followed Wednesday’s plunge in New York, with the Dow Jones dropping nearly 830 points—the biggest fall since February—after Trump’s latest criticism of the Federal Reserve.
“I think the Fed is making a mistake,” Trump told reporters as he arrived for a campaign rally ahead of the US mid-term elections.
Trump has repeatedly touted Wall Street records as proof of the success of his economic program. But he downplayed the first major drop in months, saying it was a “correction that we’ve been waiting for.”
But International Monetary Fund chief Christine Lagarde hit back on Thursday, defending rate hikes that she said were justified by fundamentals.
“It is clearly a necessary development for those economies that are showing much improved growth, inflation that is picking up… unemployment that is extremely low,” she told reporters in Bali where the Fund is meeting.
The rout in US shares followed substantial losses on European bourses, due in part to tensions between Brussels and Rome over Italian budget plans that have revived fears about the eurozone.
Bourses in Paris and Frankfurt both lost more than two percent, while London fell 1.3 percent.
“It’s just a beginning,” CEB International research head Banny Lam told Bloomberg.
“The US tech bubble may take a while to burst and we are facing many external uncertainties—trade wars, risks in emerging markets currencies and oil price.”
Many of the biggest US names fell hard in Wednesday’s session, with Apple, Boeing and Facebook all slumping more than four percent and Amazon, Nike and Microsoft shedding more than five percent. With AFP