The stock market sank along with most of Asia, fueling fears of fresh volatility after Federal Reserve minutes fanned expectations US interest rates would rise further.
The Philippine Stock Exchange Index tumbled 98.08 points, or 1.1 percent, to 8,515.57 on a value turnover of P10.4 billion. Losers overwhelmed gainers, 136 to 77, with 49 issues unchanged.
PXP Energy Corp., a unit Philex Mining Corp., slumped 11 percent to P16.02, while conglomerate Metro Pacific Investments Corp. lost 3.8 percent to P5.63.
SM Investments Corp. of retail tycoon Henry Sy dropped 3.6 percent to P950, while conglomerate Ayala Corp. fell 2.5 percent to P1,053.
The much-anticipated notes from the Fed’s January policy meeting, meanwhile, showed the board thought Donald Trump’s sweeping tax cuts would fire up the already humming economy, pushing inflation higher.
Analysts speculate that the Fed will lift interest rates at its next meeting in March but there is debate about whether it will carry out three increases—as many have predicted—or four, in light of the recent spate of strong data.
“Our take is that the minutes reflect events prior to the jump in hourly earnings seen in the January jobs report and also prior to the extra spending bill passed by Congress early in February,” said Rodrigo Catril, senior forex strategist at National Australia Bank.
“This would suggest that there is a good chance that the current FOMC thinking has evolved towards a more hawkish tone since.”
Wednesday’s news saw the key 10-year US Treasury yield hit a four-year high and boosted the dollar but sent US equities into reverse with all three main indexes ending in negative territory.
Investors have been on edge since the start of this month when global markets were sent spinning by a strong US jobs and wages report that fueled talk of tighter borrowing costs.
Equities around the world have surged to record and all-time highs thanks to a years-long rally built on cheap credit from crisis-era stimulus. But with economies globally improving, central banks are beginning to wind those policies in.
Tokyo ended 1.1 percent lower, Hong Kong fell one percent, and Singapore was off 0.5 percent. Seoul shed 0.6 percent and Taipei was off 0.5 percent. Jakarta and Bangkok both fell.
However, Shanghai jumped more than two percent as mainland traders returned from a week-long break for the Lunar New Year celebrations.
There were also gains in Sydney, Kuala Lumpur and Wellington.
“The market is pricing in the possibility of a tighter Fed over time,” Evan Brown, director at UBS Asset Management and former New York Fed employee, told Bloomberg TV.
“You’re going to see volatility, you’re going to see equities get a little skittish when yields are rising, but as you look over the long term, fundamentals on the economy are very strong.”
With rates expected to rise, the dollar rallied against its main peers on Wednesday and extended gains against the pound and euro in Asian business. With AFP