Stocks declined Thursday to end a two-day advance, as investors booked profit from select blue chips while awaiting clarity on the timing of the next US Federal Reserve’s interest rate hike.
The Philippine Stock Exchange index, the 30-company benchmark, lost 1 point to close at 7,936.85, as three of the six major sectors declined.
The heavier index, representing all shares, also dropped 1 point to settle at 4,753.72, on a value turnover of P9.2 billion. Losers outnumbered gainers, 105 to 88, while 56 issues were unchanged.
Six of the 20 most active stocks ended in the green, led by DMCI Holdings Inc., the investment company of the Consunji family, which rose 1.1 percent to P15.10, while Bank of the Philippine Islands, the country’s second largest lender, went up 0.6 percent to P103.70. Security Bank Corp. gained 0.3 percent to P220.80.
Meanwhile, Asian markets mostly surged Thursday, extending a global rally that saw another record on Wall Street.
In closely watched testimony to Congress, Janet Yellen said the central bank would keep lifting borrowing costs as long as the world’s top economy showed improvement, taking into account inflation remained below its two percent target.
The remarks lit a fire under equities, with the Dow posting its highest close, on the prospect that money would continue to be cheap for the time being.
“The market is upbeat as Yellen’s comments suggest a slower pace of rate increases and that bodes well for liquidity conditions and stocks,” Banny Lam, head of research at CEB International Investment Corp. in Hong Kong, told Bloomberg News.
Hong Kong jumped one percent to its highest level since mid-2015 and Sydney climbed 1.1 percent. Singapore gained 0.6 percent and Seoul was 0.7 percent higher, with Wellington and Taipei also well up.
Shanghai was 0.2 percent stronger after data showed Chinese imports and exports both rose more than expected in June thanks to a pick-up in global demand.
Tokyo’s Nikkei ended flat with early gains eroded by a stronger yen, which hit exporters.
However, while equities were on the rise the dollar came under pressure as expectations for further monetary tightening from Washington this year eased.
There had been talk of late that the Fed would announce up to two more increases in rates before the year’s end.
“Markets seem to have concluded that … Yellen just blinked, now less confident that inflation is on track towards the Fed’s two percent target, with obvious implications for what that might mean for Fed policy,” Ray Attrill, head of FX strategy at National Australia Bank, said in a commentary.
Adding to downward pressure on the greenback is the ongoing crisis surrounding Donald Trump after his son released emails showing he had embraced Russia’s efforts to support the tycoon’s presidential campaign against Hillary Clinton.
The White House has been battered by accusations over Russian collusion and accusations of cover-ups –fueling worries about the president’s ability to push through his market-friendly economic agenda.
The US unit held its losses against the yen and euro, while it is also sharply lower versus the Canadian dollar after that country’s central bank lifted interest rates and signalled more on the horizon. With AFP, Bloomberg