Stocks fell Tuesday as fears over the impact of China’s COVID-induced lockdowns and the Federal Reserve’s plan to hike interest rates quickly continue to drag on sentiment.
The Philippine Stock Exchange Index slipped 40.81 points, or 0.6 percent, to 6,980.02 on a value turnover of P4.1 billion. Gainers, however, edged losers, 94 to 91, with 48 issues unchanged.
SM Investments Corp. of the Sy Group declined 2.8 percent to P860, while conglomerate
Ayala Corp of the Ayala Group dropped 2.7 percent to P758.
Semirara Mining and Power Corp. of the Consunji Group, the biggest coal producer, sank 2.1 percent to P28.30, while International Container Terminal Services Corp. of tycoon Enrique Razon Jr., the largest port operator, fell 1.4 percent to P223.
The rest of Asian markets were mixed Tuesday as investors scrabbled to recover from the previous day’s rout.
While Asia suffered a torrid day Monday, Wall Street managed to end on a positive note, helped by news of Elon Musk’s $44 billion purchase of Twitter.
But buying remained weak in Asia again Tuesday.
Hong Kong edged up but made only a small dent in the massive losses suffered the day before, while Shanghai extended the previous day’s losses of more than five percent. The indexes were given a brief boost after the People’s Bank of China pledged to boost growth and consumption.
However, that soon petered out and analysts said similar comments last month were not followed up with any concrete policy measures.
Tokyo, Seoul, Taipei, Mumbai and Jakarta ticked higher, though Sydney, Singapore, Wellington and Bangkok fell.
The Omicron flare-up across China has led authorities to impose strict containment measures in its biggest cities, shutting off millions of people and threatening to deal a hammer blow to the world’s number two economy.
While Shanghai—China’s largest city—has been in lockdown for weeks, Beijing has launched mass testing for nearly all its 21 million residents, with many in the capital now fearing the same fate as the financial hub.
The measures have dealt a severe blow to the economy, leading to concerns about the likely knock-on effects for the rest of the world given its reliance on goods from China.
“At this rate, most of the cities in China will be affected by some kind of restricted movement, and this can’t be solved through fiscal or monetary policies,” said Ma Jiabao at Shiheng Capital Management.
The China crisis comes as traders grapple with a hawkish Fed, which is struggling to control inflation that is sitting at a more than 40-year high.
“For the time being, the specter of more severe restrictions in China is not being traded from the inflationary side, but rather as a detriment to the global recovery and as a demand-negative shock,” said BMO Capital Markets strategists Benjamin Jeffery and Ian Lyngen.
They added that they were “less convinced that the situation will be enough to materially shift” the Fed’s plans to aggressively hike interest rates to tame runaway inflation.
US central bank policymakers have said they are keen to lift rates several times this year to get a grip on prices, with boss Jerome Powell indicating a half-point rise next month followed by more before January. With AFP
