The stock market dropped for the fourth day Friday as investors in the region shifted nervously as Donald Trump’s much-hyped tax-cut plans hung in the balance after a plan to push them through hit unexpected hurdles.
The Philippine Stock Exchange Index plunged 110.01 points, or 1.3 percent, to 8,144.02 on a value turnover of P9.7 billion. Losers overwhelmed gainers, 134 to 59, with 45 issues unchanged.
Manila Electric Co., the biggest retailer of electricity, retreated 3 percent to P305.40 on profit-taking, while Megaworld Corp., the largest lessor of office spaces, fell 2.8 percent to P5.19.
Metropolitan Bank & Trust Co., the second-biggest lender in terms of assets, tumbled 3 percent to P92.90, while Bank of the Philippine Islands, the third-biggest bank, lost 2.6 percent to P100.20.
The Dow, meanwhile, surged to new records on Wall Street as several key Republicans backed the controversial reforms, which the president says will fire up the US economy, fueling hopes they could reach Trump’s desk for signing by year’s end.
However, a new projection showing the measure would add $1 trillion to the federal deficit—complicating Trump’s argument the cuts would pay for themselves—saw three senators—Bob Corker, Jeff Flake and Ron Johnson—withdraw their support until changes were made.
Republicans hold a narrow 52-48 Senate majority and three defectors would kill the bill.
Global equities have rallied this year on the back of hopes for Trump’s market-friendly promises of tax cuts, infrastructure spending and deregulation, but analysts warn of a sharp sell-off if the plans fall flat.
Tokyo ended 0.4 percent higher, back near quarter-century highs after reversing early losses thanks to a weaker yen.
Hong Kong fell 0.3 percent, extending its losing run into a fifth day, while Shanghai was marginally up.
Sydney added 0.3 percent and Singapore rose 0.8 percent while Seoul and Wellington were both flat.
Most energy firms rose but gains were muted after Opec and Russia agreed to extend a cap on oil output by a further nine months, until the end of next year.
While the limit provided support for oil prices, the news had already been baked in, while there are also worries that they will not be continued into 2019.
“Basically, the markets did not spike because most of what was announced was expected and factored into the prices,” Sukrit Vijayakar, founder of energy consultancy Trifecta Consultants, told AFP.
“The new elements, if any, were that Libya and Nigeria would cap production, but since it did not involve any production cuts, that would not provide the market any fillip,” he added.
“The bearish factor, very carefully worded, is that the group would review in June 2018 whether it is necessary to loosen the cuts because the market is too tight. This takes care of the Russian desire to move early on production expansion.”
On currency markets the dollar held steady against its major rivals as dealers track events in Washington but there are worries about further upheaval in the Trump administration with speculation he could replace Secretary of State Rex Tillerson. With AFP