Stocks tumbled Thursday, tracking a sell-off on Wall Street, while the peso stayed near a record low against the US dollar as surging inflation, interest rate hikes and recession fears returned to the fore.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, lost 92 points, or 1.5 percent, to close at 6,055.99, as five of the six subsectors ended in the red.
The heavier all-share index also shed 43 points, or 1.3 percent, to settle at 3,223.61, on a value turnover of P8.2 billion. Losers outnumbered gainers, 107 to 58, while 51 issues were unchanged.
Four of the 10 most active stocks ended in the green, led by Globe Telecom Inc. which climbed 3.2 percent to P2,478.00 and DMCI Holdings Inc. which gained 1.9 percent to P10.50. Bank of the Philippine Islands went up 1.5 percent to P93.40, while International Container Terminal Services Inc. rose 0.9 percent to P175.00.
The peso closed flat at 58.94 against the US dollar on trading volume of $707 million, as the government said it would defend the peso against further depreciation that could stoke inflation.
Meanwhile, markets in Europe opened with all eyes on Westminster a day after Prime Minister Liz Truss’s government was plunged into a fresh crisis and facing collapse following the resignation of Home Secretary Suella Braverman.
That came days after the sacking of finance minister Kwasi Kwarteng and has left Truss’s premiership on a knife-edge.
The positive start to the week, helped by forecast-beating earnings and a major UK government policy U-turn, gave way to the downbeat mood that has characterized markets all year as traders contemplated an extended period of uncertainty.
News that UK inflation bounced back above 10 percent in September highlighted the struggle central banks have in bringing prices down, despite lifting borrowing costs in recent months.
That followed a similarly glum reading out of New Zealand earlier in the week and helped push up government bond yields around the world, indicating higher interest rates.
The unease on trading floors, and concerns that prices are showing no sign of easing, also sent investors back into the safety of the dollar, adding more inflationary pressure outside the United States and dragging on stock markets.
“As is often the case, rising US yields and the strong US dollar are the sledgehammers pounding global equities lower,” said SPI Asset Management’s Stephen Innes.
After Wall Street’s drop, markets across Asia were deep in the red, with selling also fueled by concerns about the Chinese economy as Covid cases spike in the country and leaders stick to their zero-Covid lockdown strategies.
A decision to delay the release of third-quarter growth data this week added to the unease among investors.
Hong Kong led losses, shedding almost three percent at one point, while Tokyo, Sydney, Seoul, Wellington, Taipei, Shanghai, Singapore and Mumbai were also in the red.
There was a brief rally in the afternoon sparked by a report that China was considering easing quarantine rules for people coming into the country, though traders were unable to maintain momentum.
London’s FTSE 100 fell at the open of trade. Frankfurt was also down but Paris edged up.
The losses wiped out most of the gains enjoyed at the start of the week, even as positive earnings reports came in from Netflix and top Wall Street banks, with Ellen Hazen of F.L.Putnam Investment Management warning worse could be yet to come.
“As we look at third-quarter results, we think there are going to be more misses than the market is currently expecting,” she told Bloomberg Radio.
“If you look at GDP for this year, it keeps getting revised downward and it’s really hard for companies to keep growing their earnings in the face of that.”
Forex traders remain on alert as the dollar comes within a whisker of 150 yen, with Japanese authorities saying they are keeping a close watch on the market and are ready to step in to support the beleaguered currency.
The pound was also back under pressure, having bounced Monday after Britain’s new finance minister Jeremy Hunt reversed virtually all of Truss’s debt-fuelled, tax-cutting mini-budget that hammered financial markets. With AFP
