Stocks fell amid thin trading Monday as forecast-beating US jobs data fanned expectations for another big Federal Reserve interest rate hike, while traders are now focusing on an upcoming inflation report.
The PSEi, the 30-company benchmark index of the Philippine Stock Exchange, lost 99 points, or 1.7 percent, to close at 5,832.58, as all six subsectors ended in the red.
The broader all-share index also tumbled 51 points, or 1.6 percent, to settle at 3,149.10 on a value turnover of P2.5 billion.
Losers outnumbered gainers, 158 to 36, while 37 issues were unchanged.
Nine of the 10 most active stocks declined, led by Converge ICT Solutions Inc. which retreated 6.2 percent to P12.20 and Ayala Corp. which fell 3.2 percent to P610.00.
Meanwhile, most Asian markets also ended lower Tuesday. A brief rally across trading floors last week gave way to gloom as investors grow increasingly worried that central bank efforts to tame runaway prices will plunge the global economy into recession.
Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies, and fresh China-US tensions.
All three main indexes tumbled Friday—with the Nasdaq off almost four percent—following news that a net 263,000 US jobs were created in September.
While that was down from August it was more than expected and showed that the labour market remained robust and highlighted the tough job Fed officials face in their battle against four-decade-high inflation.
With the spotlight on a consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.
Asia tracked the US losses, with Hong Kong down three percent and hefty selling in Sydney, Singapore, Mumbai, Bangkok, Manila, Jakarta and Wellington.
Shanghai dropped as traders returned from a week-long holiday, with rising Covid numbers in the country leading to worries of more economically painful lockdowns ahead of a key Communist Party gathering.
Chinese tech firms were also hit after Washington on Friday announced new export controls aimed at restricting China’s ability to buy and make high-end chips with military applications, adding to tensions between the countries.
London, Paris and Frankfurt all fell in the morning, while Moscow stocks plunged nearly 12 percent following a series of strikes on cities across Ukraine and after the bridge connecting Crimea to Russia was hit by an explosion at the weekend.
Tokyo, Seoul and Taipei were closed.
“The sell-off in equities and the rally in the dollar following Friday’s US employment report reflects the concern that the hurdle for a Fed pause is high,” said SPI Asset Management’s Stephen Innes.
“The rising unemployment rate needed to help bring down CPI inflation will require job losses despite the political fallout that is bound to ensue. Regardless, tightening monetary policy until job losses materialize is on the cards.”
He added that there was also nervousness about earnings.
“Unlike June, where earnings were poised to beat expectations, investors are biased towards hitting the sell button as concern around lagged effects of tightening hitting bottom lines now permeate expectations,” he said in a note.
The prospect of higher US borrowing costs sent the dollar rallying Friday and it held most of those gains in early Asian trade.
Investors are keeping an eye on the yen, which is edging back to the lows touched last month when the government stepped in with a massive cash injection to support the currency.
The pound weakened even as the Bank of England said it was launching a temporary facility aimed at easing liquidity pressures that arose after the UK government’s budget shocked markets last month.
It said it was ready to increase the size of its UK government bond purchases under an emergency measure due to end Friday. With AFP
