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Sunday, June 16, 2024

Stocks fall; Nickel Asia, Ayala issues top losers

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Stocks dropped Friday as soaring inflation and a series of interest rate hikes around the world continued to fan recession fears.

The Philippine Stock Exchange Index fell 52.87 points, or 0.8 percent, to 6,195.26 on a value turnover of P5.6 billion. Losers beat gainers, 124 to 70, with 44 issues unchanged.

Major property developer Ayala Land Inc. of the Ayala Group declined 5.2 percent to P22.55, while parent Ayala Corp. was down 4.9 percent to P575.50.

Nickel Asia Corp., the biggest nickel miner, sank 6.6 percent to P5.09, while fiber broadband provider Converge ICT Solutions Inc. lost 4.7 percent at P20.25.

The rest of the market in Asia were mixed on Friday while a big miss on Chinese growth added to anxiety about the world’s biggest economies.

Hong Kong and mainland Chinese markets led Asian losses after data showed China’s economy grew just 0.4 percent in the second quarter as it was battered by COVID lockdowns in major cities including Shanghai and Beijing.

The reading was well off the 1.6 percent predicted by analysts in an AFP survey, though there was speculation that it will pressure authorities to unveil new stimulus measures.

“We remain cautious on growth outlook in the second half, as spread of the much more infectious Omicron variant across the country could trigger another round of widespread lockdowns,” Nomura chief China economist Ting Lu told AFP.

Hong Kong-listed tech firms also tumbled on news that executives at Alibaba had been called in for meetings with Chinese officials following the theft of a vast police database.

Tokyo, Singapore, Seoul and Taipei rose but Sydney, Wellington, Bangkok and Jakarta fell.

Below-par earnings from JP Morgan and Morgan Stanley compounded worries that companies’ profits would be hit by the fallout from a number of issues including rising prices, monetary policy tightening and the war in Ukraine.

After rate hikes by several countries this week, investors expect the Federal Reserve to lift rates this month by 75 basis points as officials battle decades-high inflation, though some observers suggest a one-percentage-point move could even be on the cards.

The latest outsized US inflation print this week—caused by a spike in energy prices—followed last Friday’s strong US jobs data, giving the Fed room to continue its campaign to suck cash out of the financial system.

While experts warn that raising rates risks hammering the economy, the bank has made it clear its number-one priority is bringing down prices.

This has sent the dollar racing across the board, and Steve Englander at Standard Chartered Bank warned there was no end in sight for its advance.

The currency’s strength is “largely a flight to safety,” he told Bloomberg TV.

“The problem is until we get to see some light at the end of the tunnel with respect to either inflation coming off or oil prices coming off because of supply creation rather than demand destruction, it’s hard to call a top to it.”

With investors increasingly pricing in a recession next year, equities are struggling to recover.

US markets mostly fell, with sentiment weighed by the disappointing reports from JPMorgan Chase & Co. and Morgan Stanley. They will be followed over the next few days by Citigroup, Goldman Sachs and Bank of America.

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