Stocks fell Wednesday to end a five-day advance, following overnight losses on Wall Street as prospect of higher interest rates kept investors on edge.
The Philippine Stock Exchange index, the 30-company benchmark, shed 109 points, or 1.3 percent, to close at 8,613.65, as four of the six major sectors declined. Despite the loss, the bellwether was still up 0.6 percent this year.
The heavier index, representing all shares, also lost 7 points, or 0.2 percent, to settle at 5,122.17, on a value turnover of P9.5 billion. Losers outnumbered gainers, 128 to 82, while 46 issues were unchanged.
Five of the 20 most active stocks ended in the green, led by memorial park developer Golden Haven Inc. which surged 50 percent to P261 and oil explorer PXP Energy Corp. which jumped 18.9 percent to P18.
Stephen Innes, head of Asia-Pacific trading at Oanda, said: “US equity markets fell overnight on the back of higher US Treasury yields which are providing investors with more income than dividends on the S&P 500 Index.”
However, “while the prospect of higher interest rates will keep investors on edge, it’s not like we’re returning to double-digit levels,” Innes said.
He said even a rise in key US 10-year yields to 3.25 percent was “unlikely to kill the equity market rally as the benefits from fiscal stimulus should continue to feed through the markets. Investors are banking on much higher returns from equities than bonds again in 2018.”
Meanwhile, Hong Kong led Asian markets higher Wednesday as traders brushed off a retreat on Wall Street, with attention turning to the release later in the day of minutes from the Federal Reserve’s most recent policy meeting.
Trading floors have calmed down since the wild volatility that greeted the start of February, which was caused by concerns about the impact of higher US interest rates and Treasury bond yields.
While New York’s three main indexes ended in negative territory on Tuesday, Asian dealers were in upbeat mood, helping the dollar recover from recent losses against the yen and hold its own against the euro and pound.
Hong Kong surged 1.5 percent in the afternoon, boosted by energy firms after a recent run-up in oil prices, and further chipping away at the more than nine percent losses during a torrid week earlier in February.
Tokyo’s Nikkei ended 0.2 percent higher.
Sydney gained 0.1 percent, Singapore put on 1.1 percent and Seoul was up 0.6 percent. Wellington climbed 1.3 percent and Taipei returned from a week-long Lunar New Year break to jump 2.8 percent.
Shanghai remained closed for the holidays.
The Fed minutes will be closely pored over for clues about the views of policy board members as US inflation edges up, wages improve and Donald Trump’s tax cuts come into play.
On oil markets both main contracts edged down on Wednesday after a recent series of gains as the dollar edges higher, while analysts say the output cap led by OPEC and Russia is helping to mop up the global glut that hammered prices in previous years. With AFP