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Philippines, Asian stock markets plunge

Philippine stocks tumbled Monday on profit-taking while the rest of Asian markets plunged Monday after a sharp sell-off on Wall Street, fueled by concerns about the global economy and a possible recession in the United States.

The Philippine Stock Exchange Index plummeted 150.40 points, or 1.9 percent, to 7,863.02 on a value turnover of P5.4 billion. Losers overwhelmed gainers, 142 to 47, with 41 issues unchanged.

JG Summit Holdings Inc. of industrialist John Gokongwei Jr. dropped 4.3 percent to P61.65, while SM Investment Corp. of the Sy Group declined 3.8 percent to P934.

Bank of the Philippine Islands, the third-biggest lender in terms of assets, fell 3.3 percent to P85.10, while PLDT Inc., the largest telecommunications firm, lost 3 percent to P1,149.

Elsewhere, there appeared to be very little reaction to news that an investigation found no evidence of collusion between Donald Trump’s election campaign and Russia, which observers said removed some uncertainty from markets.

After a broad-based rally since the start of the year built on hopes for China-US trade talks and a more dovish Federal Reserve, dealers have been spooked by signs of a worldwide slowdown.

“It’s pretty clear we’ve seen a shift in momentum,” said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific. “What changed Friday was that there was a strong response to the weakness in growth.”

All three main indexes on Wall Street ended sharply down, while London and Frankfurt were both two percent off.

The losses filtered through to Asia, where Tokyo was hammered 3.2 percent by the break owing to a surge in the yen, which is considered a safe haven in times of turmoil.

Hong Kong dropped more than two percent in the afternoon and Shanghai closed two percent off, while Sydney shed 1.1 percent, Singapore dropped 1.4 percent and Seoul sank 1.9 percent.

There was also heavy selling in Wellington, Taipei, and Jakarta.

US and European equities went into reverse Friday as the yield on 10-year Treasury bonds fell below those for three-month notes—the first time this had happened since before the global financial crisis in 2007.

This so-called inverted yield curve shows investors are more willing to buy long-term debt—usually considered higher risk—as they consider the short-term outlook more risky.

The yield curve is closely watched since it has inverted prior to recessions in recent decades.

The rush to the 10-year US bond market followed weak manufacturing data out of the US, eurozone giant Germany and France.

That came days after the Fed’s announcement that it was unlikely to lift interest rates this year owing to unease about the US and global economy.

“Realistically, the European data has generally been poor for most of the year anyway, so this in itself isn’t news,” said OANDA senior market analyst Jeffrey Halley.

“The US data has been middling, but both confirm what everyone already knew, the global economy is slowing down after a 10-year quantitative-easing-induced bull run,” he added, referring to the massive program of post-crisis stimulus. With AFP

Topics: JG Summit Holdings Inc. , SM Investment Corp. , Bank of the Philippine Islands
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