Stocks fell Tuesday to end a five-day rally, as Asian markets plunged on rising geopolitical risks such as US tensions with Russia and Saudi Arabia, trade issues with China and Italy’s budget stand-off with the European Union.
The Philippine Stock Exchange index, the 30-company benchmark, shed 38 points, or 0.5 percent, to close at 7,197.62, as four of the six sub-sectors ended in the red. It was down 15.9 percent since the start of the year.
The heavier index, representing all shares, also tumbled 14 points, or 0.3 percent, to settle at 4,383.84, on a value turnover of P5.1 billion. Losers outnumbered gainers, 120 to 74, while 40 issues were unchanged.
Seven of the 20 most active stocks ended in the green, led by Vulcan Industrial & Mining Corp. which jumped 8.3 percent to P2.88 and IRC Properties Inc. which rose 3.1 percent to P2.66. Megawide Construction Corp. advanced 2.3 percent to P17.30.
Meanwhile, Hong Kong lost more than three percent to wipe out its gains from the previous two trading days, while Shanghai and Tokyo were more than two percent off.
The losses brought an end to a rally that was fuelled by China’s top brass issuing coordinated statements of support for the country’s markets and officials unveiling tax cut plans.
The advances had provided some much-needed support to Asia but investors reverted to selling on Tuesday, with nerves tested further after Donald Trump’s warning that he will pull out of a nuclear treaty with Russia and bolster America’s arsenal.
“Global financial markets continue to struggle to rally as various geopolitical concerns weigh on investor confidence,” Nick Twidale, chief operating officer at Rakuten Securities Australia, said.
He said that with regards to China, dealers “will be very keen to see if they can maintain the stellar run that they’ve experienced over the last couple of days.”
“With the rest of the world looking much more pessimistic in the current environment there could be a firm correction on the cards,” he said.
Shanghai sank 2.3 percent, having jumped more than six percent since Thursday’s close, while Hong Kong fell 3.1 percent in the afternoon.
Chen Jihao, partner at Gaoxi Hedge Fund in Beijing, said the words of support from Beijing would only have a limited impact and expects further selling as Chinese leaders struggle to boost the economy while fighting a huge debt mountain.
“Stocks in the past two days were like a patient, just coming out of the ICU and going straight to the nightclub — the symptoms may have temporarily gone away, but it is far from cured, and it’s only a matter of time before medicine starts to wear off,” he told Bloomberg News.
“I still abide by the belief that there will be no bull market in a deleveraging process,” he said.
Tokyo plunged 2.7 percent, Sydney lost more than one percent and Singapore fell 1.3 percent. Seoul dived 2.6 percent, Wellington lost 1.5 percent and Taipei was two percent off.
There were also steep losses in Mumbai and Jakarta.
Asia was given a tepid lead from Wall Street, where traders are turning their attention to next month’s midterm elections, which could turn control of Congress over to the Democrats.
With the polls in mind, Trump has been on a tour of the country, ramping up his nationalistic rhetoric.
On Monday he said he was ready to add to America’s nuclear stockpiles after announcing he will pull the nation out of a decades-old agreement with Moscow.
There is also growing unease about Italy’s row with the EU over its purse-busting budget, which Brussels said breaks the bloc’s financial rules. With AFP