The stock market slumped again Tuesday as investors fretted over the US-China trade war, ignoring the lower inflation figure in July.
The Philippine Stock Exchange Index sank 123.27 points, or 1.6 percent, to 7,766.75 on a value turnover of P9.7 billion. Losers routed gainers, 165 to 47, with 37 issues unchanged.
The inflation rate in July eased to a two-year low of 2.4 percent from 2.7 percent in June, giving the Bangko Sentral ng Pilipinas elbow room to adjust the policy rates in the next policy meeting on Thursday, according to economists.
Jollibee Foods Corp., the biggest fast-food chain, tumbled 4.9 percent to P235, while major property developer Ayala Land Inc. fell 2.2 percent to P48.05.
PLDT Inc., the largest telecommunications firm, declined 3.5 percent to P1,105, while conglomerate Aboitiz Equity Ventures Inc. dropped 3 percent to P49.70.
The rest of Asian markets largely fell Tuesday, but pared back heavy losses following a rout on Wall Street.
Wall Street suffered its worst sell-off of the year on Monday, with the blue-chip Dow Jones Industrial Average sinking 2.9 percent.
Tokyo opened nearly three percent lower on Tuesday before recovering to end the day 0.7 percent down.
Hong Kong was down 1.1 percent, paring back losses after sinking more than two percent at the open. Shanghai shed 1.6 percent. But Mumbai rose 0.5 percent and Bangkok edged up 0.2 percent.
A sharp fall in the Chinese yuan’s value against the dollar—breaching the 7.0 level seen as a key threshold by investors—prompted Washington to formally designate Beijing as a currency manipulator.
Tensions have escalated since US President Donald Trump last week announced fresh tariffs on Chinese goods from September 1, which would subject virtually all of the $660 billion in annual merchandise trade between the world’s two top economies to punitive duties.
On Monday, the yuan dropped to its lowest level to the dollar since August 2010, fueling speculation that Beijing was devaluing its currency to support exporters and offset Trump’s latest threat to hit $300 billion in Chinese goods with 10 percent tariffs.
The slide in the yuan’s value drew sharp criticism from Trump who called it “a major violation which will greatly weaken China over time.”
China fired back Tuesday, with the central bank saying it is “resolutely opposed” to the US designation. Trump has repeatedly accused China of currency manipulation—charges Beijing has long denied.
Beijing’s prior policy on the yuan had been to purchase foreign currencies, in part to avoid triggering capital outflows, but analysts said further weakening was likely.
“Continued yuan depreciation should be expected, albeit at a staggered pace,” said Edward Moya, senior market analyst at OANDA.
“Currency wars are taking centre stage,” he warned, adding that “Beijing is likely to tolerate further weakness and we could see another 5% before the end of the year.”
Beijing has vowed to hit back if Washington goes ahead with its latest threat and Chinese state media late Monday reported that firms in the country have stopped buying US farm produce. With AFP
