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Thursday, February 29, 2024

Stocks tumble; Ayala, BDO drop

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Stocks sank Thursday on further profit-taking, with blue chip issues that rallied in the previous sessions leading the retreat.

The Philippine Stock Exchange Index plummeted 175.44 points, or 2.2 percent, to 7,694.12 on a value turnover of P7.2 billion. Losers overwhelmed gainers, 121 to 69, with 62 issues unchanged.

Conglomerate Ayala Corp. slumped 5 percent to P940, while unit Ayala Land Inc. decreased 3.7 percent to P41.70.

BDO Unibank Inc., the biggest lender in terms of assets, fell 3.9 percent to P131.50, while SM Prime Holdings Inc. of retail tycoon Henry Sy Sr. declined 3.7 percent to P36.75.

Asian traders, meanwhile, were biding their time in early trade on Thursday as a healthy lead from Wall Street was tempered by geopolitical concerns and caution ahead of high-level China-US trade talks.

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All three main US indexes finished in the green thanks to another positive round of economic indicators and corporate results.

However, traders remain on edge with expectations that inflation will pick up pace pushing key 10-year Treasury yields to seven-year highs and making it more likely the cost of borrowing will also go up.

In Hong Kong the Hang Seng Index fell 0.4 percent, Shanghai eased 0.5 percent and Sydney was 0.2 percent down while Seoul shed 0.5 percent.

Taipei was also down.

However, Tokyo climbed 0.5 percent, with exporters boosted by a generally weaker yen. Singapore added 0.1 percent, while Bangkok and Wellington was also higher.

Thursday sees the resumption of talks between the US and China on resolving a tariff spat that has seen each side threaten duties on billions of dollars of goods and which some fear could spark a damaging trade war.

China’s Vice Premier Liu He, Xi Jinping’s pointman on economics, is leading a delegation in Washington to meet Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer. However, it has emerged that China critic and top White House trade adviser Peter Navarro will not attend.

There are hopes they can find a breakthrough after a recent gathering in Beijing ended without agreement.

Developments on the Korean peninsula are also in focus after the North’s leader Kim Jong Un warned he would pull out of a historic summit with Donald Trump because of Washington’s demands over its nuclear program.

When asked Wednesday about whether the talks would still go ahead, Trump said “we’ll see”, adding he had not been informed of any change of plan yet.

On currency markets the dollar has benefited from bets on higher US rates, keeping it around multi-month highs against its major peers, with retail data this week having provided further support.

“The consumer remains the economy’s backbone, and if this robust trend in the retail space continues to build, factor in a bit of wage growth pressure and the US dollar will continue to move higher on the back of higher yields,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

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