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PH, Asian stocks fall on trade war

Share prices slumped Tuesday along with the rest of Asia following hefty losses on Wall Street that came in response to China’s hike in tariffs on $60 billion of US imports.

The Philippine Stock Exchange Index sank 95.54 points, or 1.2 percent, to 7,646.66 on a value turnover of P11.9 billion. Losers overwhelmed gainers, 140 to 57, with 37 issues unchanged.

BDO Unibank Inc., the biggest lender in terms of assets, fell 4.1 percent to P130.20, while Bank of the Philippine Islands, the third-largest bank, also lost 4.1 percent to P81.30.

Casino operator Bloomberry Resorts Corp. dropped 4.6 percent to P10.40, while GT Capital Holdings Inc. of the Ty Group declined 4.1 percent to P815.

The rest of Asian markets extended a global sell-off Tuesday as tensions in a trade war between the global economic titans rose.

The move by Beijing was followed by a warning of further action such as dumping US Treasuries and came days after Washington more than doubled levies on $200 billion of Chinese goods and Donald Trump said he was looking at more than $300 billion more.

The stand-off has sent shockwaves through trading floors, where most dealers had a little over a week ago been confident the two sides were close to a deal.

World markets have rallied for most of the year on the back of optimism about an agreement.

Hong Kong led losses as the market reopened after a long weekend. The Hang Seng Index sank 1.5 percent while Shanghai shed 0.7 percent and Tokyo ended down 0.6 percent, marking its seventh straight loss.

Sydney and Singapore each dropped 0.9 percent, with Jakarta down 1.4 percent.

There were also losses in Taipei and Wellington, though Seoul edged up slightly.

“Uncertainty and short-term sentiment impact is likely to stay,” Medha Samant, director of investment at Fidelity International, told Bloomberg TV. “In the short term, it looks like volatility is here to stay and we could see this risk-off, risk-on going on for a long time.”

The retreat came after the Nasdaq on Wall Street suffered its worst day of 2019 and the Dow ended at its lowest point in more than three months.

After announcing the higher tariffs, the editor of Communist Party-owned Chinese newspaper Global Times warned Beijing could also hit the US by offloading Treasuries, ending US agricultural purchases and reducing orders for Boeing airplanes.

OANDA senior market analyst Jeffrey Halley warned there could be worse to come.

“Given that equity markets are so far behind the curve in repricing the risk to the new-world reality, equities could be in for an extended period of pain,” he said in a note.

However, while there is a lot of fear about an all-out trade war, which could batter the world economy, both said talks will continue, though no date has been set for the next round.

Also, Trump said he had a feeling talks with China will be “very successful” and that he intended to meet his Chinese counterpart Xi Jinping at next month’s G20 summit.

“An eventual agreement still seems the most likely outcome, although political miscalculation is a rising risk,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. With AFP

Topics: Stock Market , Philippine Stock Exchange Index , Philippine Stock Exchange , PSE , PSEi
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