Stocks sank Thursday along with the rest of Asia after minutes from the Federal Reserve’s latest policy meeting indicated it is preparing to aggressively wind back its monetary policy.
The Philippine Stock Exchange Index slumped 183.23 points, or 2.6 percent, to a three-week low of 6,926.03 on a value turnover of P6.4 billion. Losers overwhelmed gainers, 139 to 33, with 52 issues unchanged.
Universal Robina Corp. of the Gokongwei Group, the biggest snack food maker, dropped 4.8 percent to P117, while SM Prime Holdings Inc. of the Sy Group, operator of the largest shopping mall chain, fell 4.1 percent to P36.30.
Fiber broadband provider Converge ICT Solutions Inc. declined 4 percent to P27.85, while conglomerate Ayala Corp. of the Ayala Group skidded 3.8 percent to P770.
The rest of Asian equity markets fell Thursday while oil prices pared another big drop.
The eagerly awaited Fed summary dealt another blow to traders, who have grown increasingly concerned that officials will not be able to rein in 40-year-high inflation while also preventing the world’s top economy from tipping into recession.
Asia broadly followed New York down, with Tokyo, Sydney, Seoul, Taipei, Singapore, Mumbai, Wellington and Bangkok all in the red.
Hong Kong and Shanghai were also sharply lower, having given up early gains fueled by hopes that China will ease monetary policy as its giant economy struggles under the weight of lockdowns in various parts of the country.
According to the minutes, several policymakers were in favor of lifting interest rates half a percentage point while they also talked about offloading their bond holdings at a rate of $95 million per month—a process known as quantitative tightening.
The Fed’s balance sheet runs to about $9 trillion.
News that such measures were being considered comes after several members of the policy board made hawkish comments about lifting rates. The next meeting takes place May 3-4.
The prospect of borrowing costs rising at a quicker pace and to a higher level over the coming months has added to a wave of uncertainty across trading floors caused by the war in Ukraine.
And while data at the moment points to a healthy economy, commentators warn of possible hard times ahead.
“This job of orchestrating a soft landing (for the economy) is going to be difficult,” Tracie McMillion, at Wells Fargo Investment Institute, told Bloomberg Television.
“We’ve only seen quantitative tightening once before and it was to a lesser degree than it will be this time, and it ended shortly after it started.”
Wall Street tumbled for the second day in a row, with the Nasdaq again losing more than two percent, as tech firms are more susceptible to higher rates.
“The minutes… show that Fed officials are becoming increasingly alarmed at how inflationary pressures are increasing and are determined to send a message to markets that they will act decisively to keep it in check,” said CMC markets analyst Michael Hewson.
Investors are now awaiting the release of minutes from the European Central Bank’s most recent meeting, looking for signs that officials there are preparing to change from their more dovish approach to policy. With AFP