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Stock market falls on profit taking

The stock market fell Friday on profit taking to end a two-day rally and on renewed concerns of a global growth slowdown. 

The Philippine Stock Exchange Index declined 84.68 points, or 1.1 percent, to 7,797.11 on a value turnover of P5.3 billion. Losers beat gainers, 111 to 94, with 48 issues unchanged.

Conglomerate SM Investments Corp. of the Sy Group lost 3 percent to P940, while Aboitiz Power Corp. dropped 2.2 percent to P34.

Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, slipped 2.1 percent to P78.15, but Philippine National Bank, the fifth-largest bank, surged 11.1 percent to 59.90.

The rest of Asian markets tanked and the euro struggled to recover Friday as the European Central Bank’s decision to slash its growth and inflation forecasts added to increasing pessimism about the global outlook.

The announcement—and an extension of stimulus—is the latest warning of a lean road ahead after China unveiled a target for growth that would be its slowest in three decades and as the US Federal Reserve indicated it will hold off any fresh rate hikes this year.

It also threw a spanner in the works for investors in the region—particularly Shanghai—who had been chasing a rally fueled by optimism that China and the United States will hammer out a deal to end their trade war.

Adding to the selling pressure was data showing Chinese exports plunged 20 percent last month, while imports were also sharply down—both missing expectations by some margin.

While the figures were skewed by the Lunar New Year break, they highlight ongoing troubles in the world’s number-two economy, which is growing at its slowest pace for three decades.

“All these different variables are beginning to come together to paint a more dismal outlook for global growth,” Lindsey Piegza, chief economist at Stifel Nicolaus & Co., told Bloomberg TV.

The ECB said interest rates would be stuck around historic lows until the year’s end at best, with bank boss Mario Draghi warning the eurozone was “coming out of, and maybe we still are in a period of continued weakness and pervasive uncertainty.”

Thursday’s news sent the euro into a tailspin to hit a near two-year low against the dollar, while equity markets across Europe and the US ended in the red.

Those losses continued in Asia, where Shanghai, which has surged about a quarter so far this year, shed more than 4.4 percent, while Hong Kong was off 1.8 percent and Tokyo ended two percent lower.

Sydney sank one percent and Singapore 0.9 percent, with Seoul 1.3 percent off and Taipei 0.7 percent down.

Draghi cited “factors... mostly of external source,” including “the threat of protectionism” and “geopolitical considerations,” and analysts pointed out that the eurozone was in a precarious position.

“With the eurozone likely the next target for (Donald) Trump’s trade-talk embrace, a slowing economy, a central bank very low on monetary bullets, an inability by members to mount a joint fiscal response and an impending Brexit... it is no surprise that the euro fell out of bed,” said OANDA senior market analyst Jeffrey Halley. With AFP

Topics: stock market , Philippine Stock Exchange , PSE , Philippine Stock Exchange Index , PSEi
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